Switch to:
Cliffs Natural Resources Inc (NYSE:CLF)
Beneish M-Score
23.36 (As of Today)

Warning Sign:

Beneish M-Score 23.36 higher than -2.22, which implies that it might have manipulated its financial results.

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 23.36 signals that the company is a manipulator.

CLF' s Beneish M-Score Range Over the Past 10 Years
Min: -17.52   Max: 23.36
Current: 23.36

-17.52
23.36

During the past 13 years, the highest Beneish M-Score of Cliffs Natural Resources Inc was 23.36. The lowest was -17.52. And the median was -2.51.


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 * 0.3247+0.528 * 61.3743+0.404 * 1.248+0.892 * 0.9895+0.115 * 1.0954
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8029+4.679 * -1.1341-0.327 * 1.739
=23.36

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $53 Mil.
Revenue was 593.2 + 498.1 + 446 + 2280.8 = $3,818 Mil.
Gross Profit was 55.1 + 57.3 + 80.8 + -178.3 = $15 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 $152 Mil.
Total Current Liabilities was $670 Mil.
Long-Term Debt was $2,722 Mil.
Net Income was 10.6 + 60.2 + -759.8 + -1285.2 = $-1,974 Mil.
Non Operating Income was 79.1 + -2.1 + 312.9 + 16.7 = $407 Mil.
Cash Flow from Operations was 188.7 + -20 + -228.2 + 254.9 = $195 Mil.
Accounts Receivable was $166 Mil.
Revenue was 979.7 + 747.7 + 615.5 + 1515.8 = $3,859 Mil.
Gross Profit was 256.2 + 183.5 + 190 + 294.5 = $924 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 $192 Mil.
Total Current Liabilities was $1,118 Mil.
Long-Term Debt was $3,013 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)
=(53.4 / 3818.1) / (166.2 / 3858.7)
=0.01398601 / 0.0430715
=0.3247

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)
=(57.3 / 3858.7) / (55.1 / 3818.1)
=0.23951072 / 0.00390246
=61.3743

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 - (1075.9 + 1052.6) / 2271.5) / (1 - (1360.6 + 3207.9) / 4811.2)
=0.062954 / 0.0504448
=1.248

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
=3818.1 / 3858.7
=0.9895

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))
=(585.7 / (585.7 + 3207.9)) / (172.7 / (172.7 + 1052.6))
=0.15439161 / 0.14094507
=1.0954

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)
=(152.3 / 3818.1) / (191.7 / 3858.7)
=0.03988895 / 0.04967994
=0.8029

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)
=((2721.6 + 669.9) / 2271.5) / ((3012.5 + 1118.3) / 4811.2)
=1.49306626 / 0.85857998
=1.739

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
=(-1974.2 - 406.6 - 195.4) / 2271.5
=-1.1341

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 23.36 signals that the company is likely to 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 0.4772.53390.50862.32841.73550.57191.27730.84680.93730.449
GMI 1.0381.06090.63192.43620.40460.81961.9930.98842.06840.8311
AQI 0.7971.15091.19350.98910.81860.97990.34530.58893.04770.476
SGI 1.10471.1841.58630.64891.99921.40190.89470.96910.81240.4354
DEPI 0.71731.54990.73350.9051.11611.9010.87950.88730.19232.3384
SGAI 1.20941.50711.04110.98620.83750.87641.27160.84591.10921.2105
LVGI 0.93081.41231.31420.73291.34081.03861.07490.79553.95831.239
TATA -0.0891-0.014-0.0312-0.0149-0.0505-0.0529-0.1043-0.0556-2.4052-0.5463
M-score -3.39-1.04-2.81-0.81-1.61-2.75-2.63-3.00-13.65-6.31

Cliffs Natural Resources Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.06120.84680.53850.98740.84330.93730.77360.26110.32470.449
GMI 1.24310.98830.90420.71880.79922.06842.77494.471961.37420.8311
AQI 0.23510.58890.61090.60871.2623.04771.43971.73621.2480.476
SGI 0.96150.96910.89070.77510.67560.81240.86210.95010.98950.4354
DEPI 0.8950.88730.91640.93150.31550.19230.18530.24781.09542.3384
SGAI 0.89460.84120.90731.13771.14511.09270.99740.88920.80291.1449
LVGI 0.90540.79550.97841.00342.65933.95834.29674.22731.7391.239
TATA -0.1601-0.0556-0.0644-0.0407-1.3448-2.4052-3.1323-3.2322-1.1341-0.5463
M-score -3.35-3.00-3.50-3.22-9.85-13.64-17.52-17.3223.36-6.30
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)

GuruFocus Premium Plus Membership

FEEDBACK