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Frontline Ltd (NYSE:FRO)
Beneish M-Score
-1.91 (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.

Frontline Ltd has a M-score of -1.91 signals that the company is a manipulator.

FRO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.79   Max: 23.67
Current: -1.91

-3.79
23.67

During the past 13 years, the highest Beneish M-Score of Frontline Ltd was 23.67. The lowest was -3.79. And the median was -2.32.


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 Frontline Ltd 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 * 2.2687+0.528 * 0.6956+0.404 * 0.2394+0.892 * 1.8978+0.115 * 1.191
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 4.8026+4.679 * -0.0107-0.327 * 1.7529
=-1.91

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $57.4 Mil.
Revenue was 58.267 + 121.513 + 134.777 + 144.377 = $458.9 Mil.
Gross Profit was 13.149 + 66.947 + 78.764 + 82.624 = $241.5 Mil.
Total Current Assets was $467.5 Mil.
Total Assets was $2,886.7 Mil.
Property, Plant and Equipment(Net PPE) was $2,149.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $52.5 Mil.
Selling, General & Admin. Expense(SGA) was $45.1 Mil.
Total Current Liabilities was $242.0 Mil.
Long-Term Debt was $1,195.4 Mil.
Net Income was 88.703 + 17.427 + 17.37 + 31.124 = $154.6 Mil.
Non Operating Income was -28.204 + 11.013 + -3.326 + 6.409 = $-14.1 Mil.
Cash Flow from Operations was 67.856 + 43.121 + 45.698 + 42.972 = $199.6 Mil.
Accounts Receivable was $13.3 Mil.
Revenue was -182.763 + 135.619 + 118.972 + 169.998 = $241.8 Mil.
Gross Profit was -42.586 + 41.1 + 23.752 + 66.245 = $88.5 Mil.
Total Current Assets was $436.9 Mil.
Total Assets was $2,501.8 Mil.
Property, Plant and Equipment(Net PPE) was $1,089.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $31.8 Mil.
Selling, General & Admin. Expense(SGA) was $4.9 Mil.
Total Current Liabilities was $237.2 Mil.
Long-Term Debt was $473.5 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)
=(57.367 / 458.934) / (13.324 / 241.826)
=0.12500054 / 0.05509747
=2.2687

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)
=(66.947 / 241.826) / (13.149 / 458.934)
=0.3660111 / 0.52618459
=0.6956

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 - (467.465 + 2149.657) / 2886.654) / (1 - (436.908 + 1088.969) / 2501.768)
=0.09337177 / 0.39008054
=0.2394

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
=458.934 / 241.826
=1.8978

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))
=(31.845 / (31.845 + 1088.969)) / (52.537 / (52.537 + 2149.657))
=0.02841239 / 0.02385666
=1.191

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)
=(45.052 / 458.934) / (4.943 / 241.826)
=0.09816662 / 0.02044032
=4.8026

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)
=((1195.434 + 242.037) / 2886.654) / ((473.523 + 237.207) / 2501.768)
=0.49797135 / 0.28409109
=1.7529

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
=(154.624 - -14.108 - 199.647) / 2886.654
=-0.0107

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.

Frontline Ltd has a M-score of -1.91 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.

Frontline Ltd Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.78851.09510.63941.48871.20961.31570.64452.15550.62372.2687
GMI 0.66831.74530.89361.37390.98471.65471.08510.94310.76470.6956
AQI 3.68521.7870.57070.50181.27041.33041.231.43214.93170.2394
SGI 1.04170.911.5840.49691.04390.62090.79940.23151.8061.8978
DEPI 0.96750.77731.09350.89671.19470.49761.49923.55070.86391.1894
SGAI 1.46591.24486.35210.34970.93970.92551.18190.49060.71071.1281
LVGI 1.00131.1970.93680.96911.00661.1021.04281.0440.29671.7529
TATA -0.0711-0.0293-0.0302-0.0645-0.0385-0.3233-0.09210.02260.0267-0.0134
M-score -2.14-2.03-3.55-2.67-2.30-3.64-3.27-1.49-0.25-1.29

Frontline Ltd Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 11.99711110.62371112.2687
GMI 0.89340.73930.3610.31720.33130.76470.91280.73130.66850.6956
AQI 1.42821.43211.20031.26921.74554.93171.4481.0870.79130.2394
SGI 1.10020.24990.34730.34290.35121.8061.21471.32021.17871.8978
DEPI 1.02673.37293.51864.37542.7250.86390.61850.62193.51651.191
SGAI 0.88240.46430.38820.65590.92370.71071.07594.08453.38154.8026
LVGI 1.13061.0441.07541.04891.08470.29671.00540.60370.65691.7529
TATA -0.12750.0226-0.00640.009-0.02510.01410.05350.12820.1788-0.0107
M-score -2.89-1.74-2.98-2.84-3.04-0.31-1.96-2.15-1.75-1.91
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