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GuruFocus has detected 5 Warning Signs with HollyFrontier Corp $HFC.
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HollyFrontier Corp (NYSE:HFC)
Beneish M-Score
-2.56 (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.

HollyFrontier Corp has a M-score of -2.56 suggests that the company is not a manipulator.

HFC' s Beneish M-Score Range Over the Past 10 Years
Min: -4.61   Max: 1.89
Current: -2.56

-4.61
1.89

During the past 13 years, the highest Beneish M-Score of HollyFrontier Corp was 1.89. The lowest was -4.61. And the median was -2.38.


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 HollyFrontier 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 * 1.4735+0.528 * 1.3819+0.404 * 0.9072+0.892 * 0.9467+0.115 * 1.0113
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.4195+4.679 * -0.0935-0.327 * 1.3849
=-2.56

* 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 $601 Mil.
Revenue was 3080.483 + 2955.068 + 2847.27 + 2714.638 = $11,597 Mil.
Gross Profit was 120.386 + 243.264 + 248.889 + 353.62 = $966 Mil.
Total Current Assets was $2,169 Mil.
Total Assets was $9,542 Mil.
Property, Plant and Equipment(Net PPE) was $4,454 Mil.
Depreciation, Depletion and Amortization(DDA) was $371 Mil.
Selling, General & Admin. Expense(SGA) was $157 Mil.
Total Current Liabilities was $1,142 Mil.
Long-Term Debt was $2,232 Mil.
Net Income was -45.468 + 53.165 + 74.497 + -409.368 = $-327 Mil.
Non Operating Income was 4.492 + -3.683 + 3.874 + 3.751 = $8 Mil.
Cash Flow from Operations was -39.384 + 158.047 + 133.898 + 303.69 = $556 Mil.
Accounts Receivable was $431 Mil.
Revenue was 2018.724 + 2943.559 + 3585.823 + 3701.912 = $12,250 Mil.
Gross Profit was 197.099 + 68.28 + 441.115 + 703.752 = $1,410 Mil.
Total Current Assets was $1,499 Mil.
Total Assets was $8,594 Mil.
Property, Plant and Equipment(Net PPE) was $4,196 Mil.
Depreciation, Depletion and Amortization(DDA) was $354 Mil.
Selling, General & Admin. Expense(SGA) was $117 Mil.
Total Current Liabilities was $886 Mil.
Long-Term Debt was $1,308 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)
=(601.117 / 11597.459) / (430.914 / 12250.018)
=0.05183178 / 0.0351766
=1.4735

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)
=(1410.246 / 12250.018) / (966.159 / 11597.459)
=0.11512195 / 0.08330782
=1.3819

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 - (2168.839 + 4453.675) / 9542.352) / (1 - (1499.27 + 4196.257) / 8594.287)
=0.30598725 / 0.33728918
=0.9072

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
=11597.459 / 12250.018
=0.9467

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))
=(354.019 / (354.019 + 4196.257)) / (371.187 / (371.187 + 4453.675))
=0.07780165 / 0.07693215
=1.0113

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)
=(157.097 / 11597.459) / (116.898 / 12250.018)
=0.01354581 / 0.00954268
=1.4195

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)
=((2231.542 + 1141.656) / 9542.352) / ((1308.168 + 885.608) / 8594.287)
=0.35349754 / 0.2552598
=1.3849

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
=(-327.174 - 8.434 - 556.251) / 9542.352
=-0.0935

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.

HollyFrontier Corp has a M-score of -2.56 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.

HollyFrontier Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.29650.38393.20250.75660.38480.68761.11370.84890.89081.7106
GMI 0.9571.22071.99730.91320.41630.80411.94721.65520.38881.306
AQI 2.23181.53880.81320.88054.16810.9491.06631.09381.11940.8108
SGI 1.1911.2230.82491.72171.85511.30131.00350.98030.66980.7959
DEPI 1.1941.4670.89540.91861.26140.70360.8610.91091.16110.9342
SGAI 0.91290.65721.32330.68190.9140.81960.99550.91361.57431.3064
LVGI 1.0880.87261.28371.07940.54550.89290.91760.93310.91391.5521
TATA -0.0647-0.0214-0.0607-0.0491-0.03160.0059-0.0109-0.0508-0.0291-0.0912
M-score -1.86-2.46-0.60-2.36-1.27-2.56-1.88-2.46-3.34-2.59

HollyFrontier Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.84890.86180.99981.05420.89081.20051.11361.04991.71061.4735
GMI 1.65521.12160.73140.71580.38880.53780.90611.18231.3061.3819
AQI 1.09381.12581.15521.14661.11941.12980.9910.97720.81080.9072
SGI 0.98030.88820.80270.71780.66980.68130.69060.72190.79590.9467
DEPI 0.91090.94981.08021.06641.16111.12541.00090.99160.93421.0113
SGAI 0.91361.05041.19341.39711.57431.46331.51641.43281.30641.4195
LVGI 0.93310.85780.82980.82420.91391.05091.32481.33861.55211.3849
TATA -0.0508-0.0267-0.0066-0.0329-0.0291-0.0245-0.1114-0.1027-0.0912-0.0935
M-score -2.46-2.68-2.73-2.93-3.34-2.97-3.42-3.26-2.59-2.56
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