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Cliffs Natural Resources Inc. (NYSE:CLF)
Beneish M-Score
-3.00 (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.

Cliffs Natural Resources Inc. has a M-score of -3.00 suggests that the company is not a manipulator.

CLF' s 10-Year Beneish M-Score Range
Min: -7.79   Max: 0.81
Current: -3

-7.79
0.81

During the past 13 years, the highest Beneish M-Score of Cliffs Natural Resources Inc. was 0.81. The lowest was -7.79. And the median was -2.58.


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 Cliffs Natural Resources Inc. 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 * 0.8468+0.528 * 0.9883+0.404 * 0.5889+0.892 * 0.9691+0.115 * 0.8873
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8412+4.679 * -0.0556-0.327 * 0.7955
=-3.00

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $270 Mil.
Revenue was 1515.8 + 1546.6 + 1488.5 + 1140.5 = $5,691 Mil.
Gross Profit was 294.5 + 348.7 + 268.2 + 237.9 = $1,149 Mil.
Total Current Assets was $1,560 Mil.
Total Assets was $13,122 Mil.
Property, Plant and Equipment(Net PPE) was $11,153 Mil.
Depreciation, Depletion and Amortization(DDA) was $593 Mil.
Selling, General & Admin. Expense(SGA) was $232 Mil.
Total Current Liabilities was $1,086 Mil.
Long-Term Debt was $3,023 Mil.
Net Income was 43.3 + 117.2 + 146 + 107 = $414 Mil.
Non Operating Income was 0.3 + -1.2 + -2.8 + 1.1 = $-3 Mil.
Cash Flow from Operations was 460 + 297 + 414.3 + -25.4 = $1,146 Mil.
Accounts Receivable was $329 Mil.
Revenue was 1535.9 + 1544.9 + 1579.4 + 1212.4 = $5,873 Mil.
Gross Profit was 238.5 + 198.3 + 443.4 + 291.8 = $1,172 Mil.
Total Current Assets was $1,650 Mil.
Total Assets was $13,575 Mil.
Property, Plant and Equipment(Net PPE) was $11,207 Mil.
Depreciation, Depletion and Amortization(DDA) was $526 Mil.
Selling, General & Admin. Expense(SGA) was $284 Mil.
Total Current Liabilities was $1,382 Mil.
Long-Term Debt was $3,961 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)
=(270 / 5691.4) / (329 / 5872.6)
=0.04744 / 0.05602289
=0.8468

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)
=(348.7 / 5872.6) / (294.5 / 5691.4)
=0.19957089 / 0.20193625
=0.9883

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 - (1560 + 11153.4) / 13121.9) / (1 - (1650 + 11207.3) / 13574.9)
=0.03113116 / 0.05286227
=0.5889

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
=5691.4 / 5872.6
=0.9691

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))
=(525.8 / (525.8 + 11207.3)) / (593.3 / (593.3 + 11153.4))
=0.04481339 / 0.0505078
=0.8873

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)
=(231.6 / 5691.4) / (284.1 / 5872.6)
=0.04069298 / 0.04837721
=0.8412

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)
=((3022.6 + 1085.5) / 13121.9) / ((3960.7 + 1381.5) / 13574.9)
=0.31307204 / 0.39353513
=0.7955

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
=(413.5 - -2.6 - 1145.9) / 13121.9
=-0.0556

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.

Cliffs Natural Resources Inc. has a M-score of -3.00 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 own currency.

Cliffs Natural Resources Inc. Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 3.62411.58620.22132.22010.50862.32841.73550.57191.27730.8468
GMI -0.09660.55571.0381.06090.63192.43620.40460.81961.9930.9884
AQI 0.34261.42730.7971.15091.19350.98910.81860.97990.34530.5889
SGI 1.45811.44581.10471.1841.58630.64891.99921.40190.89470.9691
DEPI 1.09151.51590.71731.54990.73350.9051.11611.9010.87950.8873
SGAI 0.65120.92541.20941.50711.04110.98620.83750.87641.27160.8459
LVGI 0.92250.93780.93081.41231.31420.73291.34081.03861.07490.7955
TATA 0.2617-0.1428-0.0891-0.014-0.0312-0.0149-0.0505-0.0529-0.1043-0.0556
M-score 0.82-2.18-3.63-1.32-2.81-0.81-1.61-2.75-2.63-3.00

Cliffs Natural Resources Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.27090.56180.37360.7120.72141.30021.27440.94681.06120.8468
GMI 0.71460.82181.1011.25881.73041.99051.81411.92221.24310.9883
AQI 0.96640.97991.25431.06011.07520.34530.32320.32160.23510.5889
SGI 1.59431.42711.30621.1260.91360.87890.86440.88050.96150.9691
DEPI 1.89771.9011.86220.8090.87280.87950.88750.90150.8950.8873
SGAI 0.83170.91411.00161.07261.31181.21891.15230.95910.89460.8412
LVGI 1.09491.03860.84850.95110.95951.07490.98340.93030.90540.7955
TATA -0.0389-0.0528-0.0352-0.0064-0.0071-0.1044-0.1294-0.1631-0.1601-0.0556
M-score -1.95-2.75-2.64-2.52-2.49-2.62-2.83-3.17-3.35-3.00
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