Switch to:
Cliffs Natural Resources Inc (NYSE:CLF)
Beneish M-Score
-3.25 (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 -3.25 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: -3.25

-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 -2.56.


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 * 1.292+0.528 * 1.2757+0.404 * 0.7454+0.892 * 0.7131+0.115 * 1.2682
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.4513+4.679 * -0.169-0.327 * 0.9518
=-3.25

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

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $49 Mil.
Revenue was 553.3 + 496.2 + 305.5 + 476 = $1,831 Mil.
Gross Profit was 85.4 + 91.5 + 30.9 + 43.3 = $251 Mil.
Total Current Assets was $700 Mil.
Total Assets was $1,773 Mil.
Property, Plant and Equipment(Net PPE) was $990 Mil.
Depreciation, Depletion and Amortization(DDA) was $124 Mil.
Selling, General & Admin. Expense(SGA) was $110 Mil.
Total Current Liabilities was $324 Mil.
Long-Term Debt was $2,196 Mil.
Net Income was -25.8 + 12.8 + 108 + -60.3 = $35 Mil.
Non Operating Income was -18.2 + 3.8 + 178.9 + 0.4 = $165 Mil.
Cash Flow from Operations was 91.4 + 107.2 + -126.5 + 97.4 = $170 Mil.
Accounts Receivable was $53 Mil.
Revenue was 593.2 + 498.1 + 446 + 1030.3 = $2,568 Mil.
Gross Profit was 55.1 + 57.3 + 80.8 + 256 = $449 Mil.
Total Current Assets was $1,076 Mil.
Total Assets was $2,272 Mil.
Property, Plant and Equipment(Net PPE) was $1,053 Mil.
Depreciation, Depletion and Amortization(DDA) was $173 Mil.
Selling, General & Admin. Expense(SGA) was $106 Mil.
Total Current Liabilities was $670 Mil.
Long-Term Debt was $2,722 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)
=(49.2 / 1831) / (53.4 / 2567.6)
=0.02687056 / 0.02079763
=1.292

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)
=(449.2 / 2567.6) / (251.1 / 1831)
=0.17494937 / 0.13713818
=1.2757

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 - (699.6 + 990.1) / 1772.9) / (1 - (1075.9 + 1052.6) / 2271.5)
=0.04692876 / 0.062954
=0.7454

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
=1831 / 2567.6
=0.7131

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))
=(172.7 / (172.7 + 1052.6)) / (123.8 / (123.8 + 990.1))
=0.14094507 / 0.11114104
=1.2682

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)
=(109.6 / 1831) / (105.9 / 2567.6)
=0.059858 / 0.04124474
=1.4513

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)
=((2195.9 + 323.5) / 1772.9) / ((2721.6 + 669.9) / 2271.5)
=1.42106154 / 1.49306626
=0.9518

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
=(34.7 - 164.9 - 169.5) / 1772.9
=-0.169

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 -3.25 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.

Cliffs Natural Resources Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.4772.53390.50862.32841.81220.54771.27731.23870.52420.5489
GMI 1.0381.06090.63192.43620.40540.81791.9930.52311.4532.2352
AQI 0.7971.15091.19350.98910.81860.97990.34530.58896.64860.2122
SGI 1.10471.1841.58630.64891.91451.46390.89470.66250.8670.5969
DEPI 0.71731.54990.73350.9051.11611.9010.87950.88730.15782.8499
SGAI 1.20941.50711.04110.98620.7430.98781.27160.87521.08941.1913
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 -3.35-1.00-2.81-0.81-1.59-2.74-2.63-3.16-12.87-5.41

Cliffs Natural Resources Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.66471.58120.52420.70070.22050.25750.54890.82291.97371.292
GMI 0.32070.31281.4531.76092.33933.49742.23522.43261.86531.2757
AQI 0.60871.2626.64861.43971.73621.2480.21220.92640.73960.7454
SGI 0.45970.36030.8670.95181.12541.24760.59690.58460.63330.7131
DEPI 0.93150.31550.15780.18530.24781.09542.84992.30791.75691.2682
SGAI 1.30641.38761.06750.98530.81740.68511.21681.30361.19611.4513
LVGI 1.00342.65933.83744.29674.22731.7391.27891.12971.10810.9518
TATA -0.0407-1.3447-2.418-3.1323-3.2323-1.1342-0.5514-0.1471-0.2474-0.169
M-score -3.12-9.75-12.87-18.04-18.32-7.01-5.42-2.92-2.70-3.25
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK