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Frontline Ltd (OSTO:FROo)
Piotroski F-Score
5 (As of Today)

The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Frontline Ltd has an F-score of 5 indicating the company's financial situation is typical for a stable company.

OSTO:FROO' s 10-Year Piotroski F-Score Range
Min: 2   Max: 8
Current: 5

2
8

During the past 13 years, the highest Piotroski F-Score of Frontline Ltd was 8. The lowest was 2. And the median was 5.


Definition

How is the Piotroski F-Score calculated?

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Net Income was -72.3652694611 + -474.121212121 + -379.917197452 + -94.7153284672 = Kr-1,021 Mil.
Cash Flow from Operations was 126.658682635 + -2.6 + 112.929936306 + 123.795620438 = Kr361 Mil.
Revenue was 1017.95209581 + 721.042424242 + 863.815286624 + 986.124087591 = Kr3,589 Mil.
Gross Profit was 396.676646707 + 143.951515152 + 261.78343949 + 383.576642336 = Kr1,186 Mil.
Average Total Assets from the begining of this year (Dec13)
to the end of this year (Dec14) was
(8390.21472393 + 8228.02994012 + 7586.67878788 + 6611.68789809 + 7023.20437956) / 5 = Kr7567.96314592 Mil.
Total Assets at the begining of this year (Dec13) was Kr8,390 Mil.
Long-Term Debt was Kr4,323 Mil.
Total Current Assets was Kr1,703 Mil.
Total Current Liabilities was Kr2,398 Mil.
Net Income was -108.410404624 + -707.511764706 + -216.94047619 + -79.9447852761 = Kr-1,113 Mil.

Revenue was 727.76300578 + 713.070588235 + 752.94047619 + 880.803680982 = Kr3,075 Mil.
Gross Profit was 143.947976879 + 82.3294117647 + 144.773809524 + 246.503067485 = Kr618 Mil.
Average Total Assets from the begining of last year (Dec12)
to the end of last year (Dec13) was
(9484.38764045 + 9154.13294798 + 8636.40588235 + 8387.75595238 + 8390.21472393) / 5 = Kr8810.57942942 Mil.
Total Assets at the begining of last year (Dec12) was Kr9,484 Mil.
Long-Term Debt was Kr7,232 Mil.
Total Current Assets was Kr1,596 Mil.
Total Current Liabilities was Kr802 Mil.

Profitability

Question 1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Frontline Ltd's current net income (TTM) was -1,021. ==> Negative ==> Score 0.

Question 2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Frontline Ltd's current cash flow from operations (TTM) was 361. ==> Positive ==> Score 1.

Question 3. Change in Return on Assets

Compare this year’s return on assets (1) to last year’s return on assets.

Score 1 if it’s higher, 0 if it’s lower.

ROA (This Year)=Net Income (TTM)/Total Assets at the Beginning of This Year (Dec13)
=-1021.1190075/8390.21472393
=-0.12170356

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=-1112.8074308/9484.38764045
=-0.11733045

Frontline Ltd's return on assets of this year was -0.12170356. Frontline Ltd's return on assets of last year was -0.11733045. ==> Last year is higher ==> Score 0.

Question 4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA <= ROA.

Frontline Ltd's current net income (TTM) was -1,021. Frontline Ltd's current cash flow from operations (TTM) was 361. ==> 361 > -1,021 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=4322.56934307/7567.96314592
=0.57116681

Gearing (Last Year: Dec13)=Long-Term Debt/Average Total Assets from Dec12 to Dec13
=7231.8404908/8810.57942942
=0.82081327

Frontline Ltd's gearing of this year was 0.57116681. Frontline Ltd's gearing of last year was 0.82081327. ==> This year is lower or equal to last year. ==> Score 1.

Question 6. Change in Working Capital (Liquidity)

Compare this year’s current ratio (current assets divided by current liabilities) to last year’s current ratio.

Score 1 if this year'’s current ratio is higher, 0 if it’s lower

Current Ratio (This Year: Dec14)=Total Current Assets/Total Current Liabilities
=1702.50364964/2398.45255474
=0.7098342

Current Ratio (Last Year: Dec13)=Total Current Assets/Total Current Liabilities
=1596.03067485/802.282208589
=1.98936317

Frontline Ltd's current ratio of this year was 0.7098342. Frontline Ltd's current ratio of last year was 1.98936317. ==> Last year's current ratio is higher ==> Score 0.

Question 7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 0 if there is larger number of shares in issue this year, 1 otherwise.

Frontline Ltd's number of shares in issue this year was 109.2. Frontline Ltd's number of shares in issue last year was 84.4. ==> There is larger number of shares in issue this year. ==> Score 0.

Efficiency

Question 8. Change in Gross Margin

Compare this year’s gross margin (gross profit divided by sales) to last year’s.

Score 1 if this year’s gross margin is higher, 0 if it’s lower.

Gross Margin (This Year: TTM)=Gross Profit/Revenue
=1185.98824368/3588.93389427
=0.33045698

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=617.554265652/3074.57775119
=0.20085824

Frontline Ltd's gross margin of this year was 0.33045698. Frontline Ltd's gross margin of last year was 0.20085824. ==> This year's gross margin is higher. ==> Score 1.

Question 9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by total assets at the beginning of the year) to last year’s asset turnover ratio.

Score 1 if this year’s asset turnover ratio is higher, 0 if it’s lower

Asset Turnover (This Year)=Revenue (TTM)/Total Assets at the Beginning of This Year (Dec13)
=3588.93389427/8390.21472393
=0.42775233

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=3074.57775119/9484.38764045
=0.32417251

Frontline Ltd's asset turnover of this year was 0.42775233. Frontline Ltd's asset turnover of last year was 0.32417251. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=0+1+0+1+1+0+0+1+1
=5

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Frontline Ltd has an F-score of 5 indicating the company's financial situation is typical for a stable company.


Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Related Terms

Net Income, Cash Flow from Operations, Revenue, Gross Profit, Total Assets, Long-Term Debt, Total Current Assets, Total Current Liabilities


Historical Data

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

Frontline Ltd Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111110000
Question 2 1111111101
Question 3 0011010100
Question 4 1101111111
Question 5 0110101001
Question 6 0000101000
Question 7 0100001100
Question 8 0011000001
Question 9 0001010111
F-score 3556555525

Frontline Ltd Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
Question 1 0000000000
Question 2 1100001111
Question 3 0111100100
Question 4 1111111111
Question 5 0000000111
Question 6 1000100000
Question 7 1110100000
Question 8 0000001111
Question 9 0111111111
F-score 4543524655
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