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Cliffs Natural Resources Inc (NYSE:CLF)
Beneish M-Score
-9.42 (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 -9.42 suggests that the company is not a manipulator.

CLF' s 10-Year Beneish M-Score Range
Min: -9.42   Max: 1.45
Current: -9.42

-9.42
1.45

During the past 13 years, the highest Beneish M-Score of Cliffs Natural Resources Inc was 1.45. The lowest was -9.42. And the median was -2.50.


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 * 0.6703+0.528 * 1.61+0.404 * 1.262+0.892 * 0.85+0.115 * 0.3155
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.092+4.679 * -1.3449-0.327 * 2.6593
=-9.42

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $166 Mil.
Revenue was 1298.2 + 1100.8 + 940 + 1515.8 = $4,855 Mil.
Gross Profit was 127.5 + 92 + 63.2 + 294.5 = $577 Mil.
Total Current Assets was $1,361 Mil.
Total Assets was $4,811 Mil.
Property, Plant and Equipment(Net PPE) was $3,208 Mil.
Depreciation, Depletion and Amortization(DDA) was $586 Mil.
Selling, General & Admin. Expense(SGA) was $230 Mil.
Total Current Liabilities was $1,118 Mil.
Long-Term Debt was $3,013 Mil.
Net Income was -5879.6 + 10.9 + -70.3 + 43.3 = $-5,896 Mil.
Non Operating Income was 7.1 + 2.2 + 1.2 + 0.3 = $11 Mil.
Cash Flow from Operations was 227.9 + -41.9 + -82 + 460 = $564 Mil.
Accounts Receivable was $292 Mil.
Revenue was 1546.6 + 1488.5 + 1140.5 + 1535.9 = $5,712 Mil.
Gross Profit was 348.7 + 268.2 + 237.9 + 238.5 = $1,093 Mil.
Total Current Assets was $1,670 Mil.
Total Assets was $13,567 Mil.
Property, Plant and Equipment(Net PPE) was $11,355 Mil.
Depreciation, Depletion and Amortization(DDA) was $582 Mil.
Selling, General & Admin. Expense(SGA) was $248 Mil.
Total Current Liabilities was $1,061 Mil.
Long-Term Debt was $3,320 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)
=(166.2 / 4854.8) / (291.7 / 5711.5)
=0.03423416 / 0.0510724
=0.6703

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)
=(92 / 5711.5) / (127.5 / 4854.8)
=0.19142082 / 0.11889264
=1.61

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 - (1360.6 + 3207.9) / 4811.2) / (1 - (1669.6 + 11354.8) / 13566.7)
=0.0504448 / 0.03997287
=1.262

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
=4854.8 / 5711.5
=0.85

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))
=(581.5 / (581.5 + 11354.8)) / (585.7 / (585.7 + 3207.9))
=0.04871694 / 0.15439161
=0.3155

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)
=(230 / 4854.8) / (247.8 / 5711.5)
=0.04737579 / 0.04338615
=1.092

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)
=((3012.5 + 1118.3) / 4811.2) / ((3319.6 + 1060.5) / 13566.7)
=0.85857998 / 0.3228567
=2.6593

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
=(-5895.7 - 10.8 - 564) / 4811.2
=-1.3449

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 -9.42 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 3.90550.68650.4772.53390.50862.32841.73540.58381.25120.8468
GMI -0.09660.55571.0381.06090.63192.43620.40540.82231.98270.9884
AQI 0.34261.42730.7971.15091.19350.98910.81860.97990.34530.5889
SGI 1.45811.44581.10471.1841.58630.64891.99921.45110.86440.9691
DEPI 1.09151.51590.71731.54990.73350.9051.11611.92220.86990.8873
SGAI 0.65120.92541.20941.50711.04110.98620.98630.79451.19110.8459
LVGI 0.92250.93780.93081.41231.31420.73291.43120.93251.17470.7596
TATA 0.2617-0.1428-0.0891-0.014-0.0312-0.0149-0.0505-0.0529-0.1043-0.0556
M-score 1.08-3.01-3.39-1.04-2.81-0.81-1.66-2.65-2.71-2.99

Cliffs Natural Resources Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.68950.70861.23051.29530.97761.08930.86110.51070.85630.6703
GMI 1.23421.63691.98661.81111.93411.28520.98651.0831.05551.61
AQI 1.06011.07520.34530.32320.32160.23510.58890.61090.60871.262
SGI 1.16260.93010.87890.85040.85270.93660.95310.9390.89380.85
DEPI 0.80370.85990.86990.88750.9040.90080.88730.91640.93150.3155
SGAI 0.96521.06741.18181.1110.92460.90790.83710.9051.1041.092
LVGI 0.95110.95951.17470.98340.93030.90540.75960.97841.00342.6593
TATA -0.0068-0.0069-0.1042-0.1292-0.1629-0.1597-0.0556-0.0644-0.0408-1.3449
M-score -2.51-2.49-2.71-2.82-3.15-3.32-2.99-3.39-3.05-9.42
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