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Cliffs Natural Resources Inc (NYSE:CLF)
Beneish M-Score
-2.92 (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 -2.92 suggests that the company is not a manipulator.

CLF' s Beneish M-Score Range Over the Past 10 Years
Min: -18.31   Max: 1.46
Current: -2.92

-18.31
1.46

During the past 13 years, the highest Beneish M-Score of Cliffs Natural Resources Inc was 1.46. The lowest was -18.31. 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 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 * 0.8229+0.528 * 2.4326+0.404 * 0.9264+0.892 * 0.5846+0.115 * 2.3079
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3036+4.679 * -0.1471-0.327 * 1.1297
=-2.92

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $42 Mil.
Revenue was 305.5 + 476 + 593.2 + 498.1 = $1,873 Mil.
Gross Profit was 30.9 + 43.3 + 55.1 + 57.3 = $187 Mil.
Total Current Assets was $792 Mil.
Total Assets was $1,886 Mil.
Property, Plant and Equipment(Net PPE) was $1,010 Mil.
Depreciation, Depletion and Amortization(DDA) was $136 Mil.
Selling, General & Admin. Expense(SGA) was $109 Mil.
Total Current Liabilities was $440 Mil.
Long-Term Debt was $2,499 Mil.
Net Income was 108 + -60.3 + 10.6 + 60.2 = $119 Mil.
Non Operating Income was 178.9 + 0.4 + 79.1 + -2.1 = $256 Mil.
Cash Flow from Operations was -126.5 + 97.4 + 188.7 + -20 = $140 Mil.
Accounts Receivable was $87 Mil.
Revenue was 446 + 1030.3 + 979.7 + 747.7 = $3,204 Mil.
Gross Profit was 80.8 + 256 + 256.2 + 183.5 = $777 Mil.
Total Current Assets was $1,524 Mil.
Total Assets was $2,703 Mil.
Property, Plant and Equipment(Net PPE) was $1,047 Mil.
Depreciation, Depletion and Amortization(DDA) was $396 Mil.
Selling, General & Admin. Expense(SGA) was $143 Mil.
Total Current Liabilities was $847 Mil.
Long-Term Debt was $2,881 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)
=(41.9 / 1872.8) / (87.1 / 3203.7)
=0.02237292 / 0.02718731
=0.8229

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)
=(43.3 / 3203.7) / (30.9 / 1872.8)
=0.242376 / 0.09963691
=2.4326

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 - (792 + 1009.6) / 1886.3) / (1 - (1524.4 + 1047.2) / 2702.6)
=0.04490272 / 0.04847184
=0.9264

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
=1872.8 / 3203.7
=0.5846

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))
=(395.9 / (395.9 + 1047.2)) / (136.2 / (136.2 + 1009.6))
=0.27433996 / 0.11886891
=2.3079

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)
=(109.2 / 1872.8) / (143.3 / 3203.7)
=0.05830842 / 0.04472953
=1.3036

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)
=((2499.1 + 439.8) / 1886.3) / ((2880.9 + 846.5) / 2702.6)
=1.55802364 / 1.37919041
=1.1297

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
=(118.5 - 256.3 - 139.6) / 1886.3
=-0.1471

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 -2.92 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.4772.53390.50862.32841.73540.55251.32210.84680.55940.7524
GMI 1.0381.06090.63192.43620.40540.82231.98270.98842.06840.8311
AQI 0.7971.15091.19350.98910.81860.97990.34530.58896.64860.2122
SGI 1.10471.1841.58630.64891.99921.45110.86440.96910.81240.4354
DEPI 0.71731.54990.73350.9051.11611.9010.87950.88730.15782.8499
SGAI 1.20941.50711.04110.98620.98630.79451.19110.84591.10921.2105
LVGI 0.93081.41231.31420.73291.34081.03861.07490.79553.83741.2789
TATA -0.081-0.0067-0.0312-0.0149-0.0505-0.0529-0.1043-0.0556-2.418-0.5514
M-score -3.35-1.00-2.81-0.81-1.63-2.71-2.61-3.00-12.56-6.11

Cliffs Natural Resources Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.23870.82661.66471.58120.52420.70070.22050.25750.54890.8229
GMI 0.52310.45160.32070.31281.4531.76092.33933.49742.23522.4326
AQI 0.58890.61090.60871.2626.64861.43971.73621.2480.21220.9264
SGI 0.66250.58020.45970.36030.8670.95181.12541.24760.59690.5846
DEPI 0.88730.91640.93150.31550.15780.18530.24781.09542.84992.3079
SGAI 0.87020.96461.30641.38761.06750.98530.81740.68511.21681.3036
LVGI 0.79550.97841.00342.65933.83744.29674.22731.7391.27891.1297
TATA -0.0556-0.0644-0.0407-1.3447-2.418-3.1323-3.2323-1.1342-0.5514-0.1471
M-score -3.16-3.76-3.12-9.75-12.87-18.04-18.32-7.01-5.42-2.92
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