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Cliffs Natural Resources Inc (NYSE:CLF)
Beneish M-Score
-3.05 (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 -3.05 suggests that the company is not a manipulator.

CLF' s 10-Year Beneish M-Score Range
Min: -7.99   Max: 1.46
Current: -3.05

-7.99
1.46

During the past 13 years, the highest Beneish M-Score of Cliffs Natural Resources Inc was 1.46. The lowest was -7.99. 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 * 0.8563+0.528 * 1.0555+0.404 * 0.6087+0.892 * 0.8938+0.115 * 0.9315
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.104+4.679 * -0.0408-0.327 * 1.0034
=-3.05

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $198 Mil.
Revenue was 1100.8 + 940 + 1515.8 + 1546.6 = $5,103 Mil.
Gross Profit was 92 + 63.2 + 294.5 + 348.7 = $798 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 $238 Mil.
Total Current Liabilities was $1,038 Mil.
Long-Term Debt was $3,293 Mil.
Net Income was 10.9 + -70.3 + 43.3 + 117.2 = $101 Mil.
Non Operating Income was 2.2 + 1.2 + 0.3 + -1.2 = $3 Mil.
Cash Flow from Operations was -41.9 + -82 + 460 + 297 = $633 Mil.
Accounts Receivable was $259 Mil.
Revenue was 1488.5 + 1140.5 + 1535.9 + 1544.9 = $5,710 Mil.
Gross Profit was 268.2 + 237.9 + 238.5 + 198.3 = $943 Mil.
Total Current Assets was $1,666 Mil.
Total Assets was $13,595 Mil.
Property, Plant and Equipment(Net PPE) was $11,190 Mil.
Depreciation, Depletion and Amortization(DDA) was $561 Mil.
Selling, General & Admin. Expense(SGA) was $241 Mil.
Total Current Liabilities was $1,155 Mil.
Long-Term Debt was $3,323 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)
=(198.3 / 5103.2) / (259.1 / 5709.8)
=0.03885797 / 0.04537812
=0.8563

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)
=(63.2 / 5709.8) / (92 / 5103.2)
=0.16513713 / 0.15645085
=1.0555

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 - (1663.8 + 11004.8) / 13102.4) / (1 - (1665.9 + 11189.6) / 13594.9)
=0.03310844 / 0.05438804
=0.6087

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
=5103.2 / 5709.8
=0.8938

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))
=(561.3 / (561.3 + 11189.6)) / (594.8 / (594.8 + 11004.8))
=0.04776655 / 0.05127763
=0.9315

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)
=(237.9 / 5103.2) / (241.1 / 5709.8)
=0.04661781 / 0.04222565
=1.104

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)
=((3293 + 1037.5) / 13102.4) / ((3323.3 + 1154.6) / 13594.9)
=0.33051197 / 0.32938087
=1.0034

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
=(101.1 - 2.5 - 633.1) / 13102.4
=-0.0408

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 -3.05 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 3.90550.68650.4772.53390.50862.32841.73550.57191.27730.8468
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 1.08-3.01-3.39-1.04-2.81-0.81-1.61-2.75-2.63-3.00

Cliffs Natural Resources Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.37360.7120.72141.30021.27440.94681.06120.84680.50670.8563
GMI 1.1011.25881.73041.99051.81411.92221.24310.98831.0861.0555
AQI 1.25431.06011.07520.34530.32320.32160.23510.58890.61090.6087
SGI 1.30621.1260.91360.87890.86440.88050.96150.96910.94660.8938
DEPI 1.86220.8090.87280.87950.88750.90150.8950.88730.91640.9315
SGAI 1.00161.07261.31181.21891.15230.95910.89460.84120.90671.104
LVGI 0.84850.95110.95951.07490.98340.93030.90540.79550.97841.0034
TATA -0.0352-0.0064-0.0071-0.1044-0.1294-0.1631-0.1601-0.0556-0.0644-0.0408
M-score -2.64-2.52-2.49-2.62-2.83-3.17-3.35-3.00-3.38-3.05
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