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GuruFocus has detected 4 Warning Signs with Colfax Corp $CFX.
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Colfax Corp (NYSE:CFX)
Beneish M-Score
-2.49 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Colfax Corp has a M-score of -2.49 suggests that the company is not a manipulator.

CFX' s Beneish M-Score Range Over the Past 10 Years
Min: -4.25   Max: 2.18
Current: -2.49

-4.25
2.18

During the past 13 years, the highest Beneish M-Score of Colfax Corp was 2.18. The lowest was -4.25. And the median was -2.54.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Colfax Corp for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 1.1121+0.528 * 0.9942+0.404 * 0.9934+0.892 * 0.9192+0.115 * 0.9989
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9797+4.679 * -0.0105-0.327 * 0.9587
=-2.49

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $901 Mil.
Revenue was 844.926 + 933.751 + 879.204 + 957.249 = $3,615 Mil.
Gross Profit was 279.367 + 288.618 + 275.407 + 301.105 = $1,144 Mil.
Total Current Assets was $1,781 Mil.
Total Assets was $6,430 Mil.
Property, Plant and Equipment(Net PPE) was $575 Mil.
Depreciation, Depletion and Amortization(DDA) was $138 Mil.
Selling, General & Admin. Expense(SGA) was $817 Mil.
Total Current Liabilities was $1,082 Mil.
Long-Term Debt was $1,245 Mil.
Net Income was 38.542 + 37.772 + 27.97 + 39.754 = $144 Mil.
Non Operating Income was 0 + -60.032 + 0 + 0 = $-60 Mil.
Cash Flow from Operations was 40.405 + 145.12 + 45.442 + 40.896 = $272 Mil.
Accounts Receivable was $882 Mil.
Revenue was 876.843 + 1061.464 + 969.144 + 1025.375 = $3,933 Mil.
Gross Profit was 280.521 + 333.425 + 295.874 + 328.037 = $1,238 Mil.
Total Current Assets was $1,785 Mil.
Total Assets was $6,724 Mil.
Property, Plant and Equipment(Net PPE) was $651 Mil.
Depreciation, Depletion and Amortization(DDA) was $155 Mil.
Selling, General & Admin. Expense(SGA) was $907 Mil.
Total Current Liabilities was $1,098 Mil.
Long-Term Debt was $1,440 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(901.327 / 3615.13) / (881.691 / 3932.826)
=0.24932077 / 0.22418765
=1.1121

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(1237.857 / 3932.826) / (1144.497 / 3615.13)
=0.31475 / 0.3165853
=0.9942

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1780.577 + 575.428) / 6429.745) / (1 - (1784.746 + 650.863) / 6723.748)
=0.63357723 / 0.63776022
=0.9934

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=3615.13 / 3932.826
=0.9192

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(155.333 / (155.333 + 650.863)) / (137.513 / (137.513 + 575.428))
=0.19267399 / 0.19288132
=0.9989

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(816.899 / 3615.13) / (907.107 / 3932.826)
=0.2259667 / 0.23065017
=0.9797

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((1244.902 + 1081.854) / 6429.745) / ((1440.309 + 1097.661) / 6723.748)
=0.36187376 / 0.37746358
=0.9587

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(144.038 - -60.032 - 271.863) / 6429.745
=-0.0105

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Colfax Corp has a M-score of -2.49 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Colfax Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.96761.0021.00881.07350.93631.31711.09040.91461.0061.1189
GMI 1.00210.96581.01471.0021.01991.17630.94810.97091.01341.0045
AQI 0.85420.99141.06330.97690.99210.91151.03961.08661.05840.9669
SGI 1.28631.19460.8681.03231.27945.64451.0751.09920.85780.9193
DEPI 0.87981.15910.98370.88760.79620.94631.54060.70491.00141.0091
SGAI 0.67221.54880.71121.14960.95290.98880.88511.06431.04440.9908
LVGI 0.990.68570.86171.11271.21471.49030.92060.90410.96460.9982
TATA -0.01070.0355-0.0148-0.0448-0.0483-0.0388-0.02780.0151-0.006-0.0092
M-score -2.32-2.13-2.53-2.68-2.591.67-2.36-2.39-2.59-2.49

Colfax Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.91460.91830.91621.00541.0060.98990.98571.01431.11891.1121
GMI 0.97090.96220.9730.98771.01341.02641.02811.01031.00450.9942
AQI 1.08661.12351.04151.03121.05841.04391.02191.00970.96690.9934
SGI 1.09921.03870.97020.89590.85780.87760.89730.9180.91930.9192
DEPI 0.70490.66220.81630.9121.00141.08880.96390.98751.00910.9989
SGAI 1.06431.08411.02781.06181.04441.04111.06881.00960.99080.9797
LVGI 0.90411.08070.90380.98360.96460.9771.02780.96450.99820.9587
TATA 0.01510.0071-0.0077-0.0043-0.006-0.013-0.0111-0.0036-0.0092-0.0105
M-score -2.39-2.54-2.61-2.60-2.59-2.62-2.64-2.54-2.49-2.49
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