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Cliffs Natural Resources Inc (NYSE:CLF)
Beneish M-Score
-18.79 (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 -18.79 suggests that the company is not a manipulator.

CLF' s 10-Year Beneish M-Score Range
Min: -18.79   Max: 1.46
Current: -18.79

-18.79
1.46

During the past 13 years, the highest Beneish M-Score of Cliffs Natural Resources Inc was 1.46. The lowest was -18.79. And the median was -2.52.


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 * 0.3113+0.528 * 1.8657+0.404 * 1.7362+0.892 * 0.797+0.115 * 0.2478
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.929+4.679 * -3.2319-0.327 * 4.2273
=-18.79

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $49 Mil.
Revenue was 498.1 + 446 + 1284.7 + 1298.2 = $3,527 Mil.
Gross Profit was 57.3 + 80.8 + 168.7 + 127.5 = $434 Mil.
Total Current Assets was $1,382 Mil.
Total Assets was $2,609 Mil.
Property, Plant and Equipment(Net PPE) was $1,077 Mil.
Depreciation, Depletion and Amortization(DDA) was $281 Mil.
Selling, General & Admin. Expense(SGA) was $157 Mil.
Total Current Liabilities was $758 Mil.
Long-Term Debt was $2,887 Mil.
Net Income was 60.2 + -759.8 + -1285.2 + -5879.6 = $-7,864 Mil.
Non Operating Income was -2.1 + 312.9 + 16.3 + 7.1 = $334 Mil.
Cash Flow from Operations was -20 + -228.2 + 254.9 + 227.9 = $235 Mil.
Accounts Receivable was $198 Mil.
Revenue was 747.7 + 615.5 + 1515.8 + 1546.6 = $4,426 Mil.
Gross Profit was 183.5 + 190 + 294.5 + 348.7 = $1,017 Mil.
Total Current Assets was $1,664 Mil.
Total Assets was $13,102 Mil.
Property, Plant and Equipment(Net PPE) was $11,005 Mil.
Depreciation, Depletion and Amortization(DDA) was $595 Mil.
Selling, General & Admin. Expense(SGA) was $213 Mil.
Total Current Liabilities was $1,038 Mil.
Long-Term Debt was $3,293 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 / 3527) / (198.3 / 4425.6)
=0.01394953 / 0.04480748
=0.3113

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)
=(80.8 / 4425.6) / (57.3 / 3527)
=0.22973156 / 0.12313581
=1.8657

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 - (1382.2 + 1077.2) / 2609.4) / (1 - (1663.8 + 11004.8) / 13102.4)
=0.05748448 / 0.03310844
=1.7362

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
=3527 / 4425.6
=0.797

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))
=(594.8 / (594.8 + 11004.8)) / (281.1 / (281.1 + 1077.2))
=0.05127763 / 0.20694986
=0.2478

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)
=(157.4 / 3527) / (212.6 / 4425.6)
=0.04462716 / 0.04803868
=0.929

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)
=((2887.4 + 758.4) / 2609.4) / ((3293 + 1037.5) / 13102.4)
=1.39717943 / 0.33051197
=4.2273

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
=(-7864.4 - 334.2 - 234.6) / 2609.4
=-3.2319

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 -18.79 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.68650.4772.53390.50862.32841.73550.57191.27730.84680.9373
GMI 0.55571.0381.06090.63192.43620.40460.81961.9930.98842.0684
AQI 1.42730.7971.15091.19350.98910.81860.97990.34530.58893.0477
SGI 1.44581.10471.1841.58630.64891.99921.40190.89470.96910.8124
DEPI 1.51590.71731.54990.73350.9051.11611.9010.87950.88730.1923
SGAI 0.92541.20941.50711.04110.98620.83750.87641.27160.84591.1092
LVGI 0.93780.93081.41231.31420.73291.34081.03861.07490.79553.9583
TATA -0.1428-0.0891-0.014-0.0312-0.0149-0.0505-0.0529-0.1043-0.0556-2.4052
M-score -3.01-3.39-1.04-2.81-0.81-1.61-2.75-2.63-3.00-13.65

Cliffs Natural Resources Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.27440.94681.06120.84680.53850.98740.7791.09830.91240.3113
GMI 1.81411.92221.24310.98830.90420.71881.00521.18991.43641.8657
AQI 0.32320.32160.23510.58890.61090.60871.2623.04771.43971.7362
SGI 0.86440.88050.96150.96910.89070.77510.73140.69330.7310.797
DEPI 0.88750.90150.8950.88730.91640.93150.31550.19230.18530.2478
SGAI 1.15230.95910.89460.84120.90731.13771.12951.14211.03870.929
LVGI 0.98340.93030.90540.79550.97841.00342.65933.95834.29674.2273
TATA -0.1294-0.1631-0.1601-0.0556-0.0644-0.0407-1.3447-2.4048-3.1319-3.2319
M-score -2.83-3.17-3.35-3.00-3.50-3.22-9.75-14.07-18.23-18.79
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