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Frontline Ltd (NYSE:FRO)
Beneish M-Score
-3.25 (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 -3.25 suggests that the company is not a manipulator.

FRO' s 10-Year Beneish M-Score Range
Min: -4.41   Max: 23.67
Current: -3.25

-4.41
23.67

During the past 13 years, the highest Beneish M-Score of Frontline Ltd was 23.67. The lowest was -4.41. And the median was -2.57.


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 * 1+0.528 * 0.6263+0.404 * 1.7455+0.892 * 1.0793+0.115 * 1.1865
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0951+4.679 * -0.1967-0.327 * 1.0847
=-3.25

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $0.0 Mil.
Revenue was 135.619 + 118.972 + 169.998 + 143.571 = $568.2 Mil.
Gross Profit was 41.1 + 23.752 + 66.245 + 40.18 = $171.3 Mil.
Total Current Assets was $257.8 Mil.
Total Assets was $1,038.0 Mil.
Property, Plant and Equipment(Net PPE) was $639.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $99.0 Mil.
Selling, General & Admin. Expense(SGA) was $38.3 Mil.
Total Current Liabilities was $324.4 Mil.
Long-Term Debt was $834.1 Mil.
Net Income was -59.647 + -78.23 + -12.085 + -13.031 = $-163.0 Mil.
Non Operating Income was -0.412 + 7.905 + 0.837 + -11.801 = $-3.5 Mil.
Cash Flow from Operations was 17.73 + -0.429 + 21.152 + 6.231 = $44.7 Mil.
Accounts Receivable was $0.0 Mil.
Revenue was 126.494 + 121.222 + 125.903 + 152.781 = $526.4 Mil.
Gross Profit was 24.322 + 13.996 + 24.903 + 36.165 = $99.4 Mil.
Total Current Assets was $277.6 Mil.
Total Assets was $1,409.1 Mil.
Property, Plant and Equipment(Net PPE) was $1,021.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $193.3 Mil.
Selling, General & Admin. Expense(SGA) was $32.4 Mil.
Total Current Liabilities was $134.9 Mil.
Long-Term Debt was $1,315.0 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)
=(0 / 568.16) / (0 / 526.4)
=0 / 0
=1

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)
=(23.752 / 526.4) / (41.1 / 568.16)
=0.18880319 / 0.3014591
=0.6263

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 - (257.833 + 639.058) / 1038.035) / (1 - (277.629 + 1021.741) / 1409.143)
=0.13597229 / 0.07790054
=1.7455

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
=568.16 / 526.4
=1.0793

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))
=(193.331 / (193.331 + 1021.741)) / (98.969 / (98.969 + 639.058))
=0.15911074 / 0.13409943
=1.1865

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)
=(38.285 / 568.16) / (32.392 / 526.4)
=0.06738419 / 0.06153495
=1.0951

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)
=((834.12 + 324.364) / 1038.035) / ((1315.032 + 134.886) / 1409.143)
=1.11603559 / 1.02893603
=1.0847

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
=(-162.993 - -3.471 - 44.684) / 1038.035
=-0.1967

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 -3.25 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.

Frontline Ltd Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.6341.09510.63941.46231.25371.15420.72160.55810
GMI 1.064900.89361.02541.34631.43781.22381.32040.6093
AQI 0.86531.7870.57070.50181.27041.33041.231.43211.3994
SGI 0.81170.911.5840.50591.00720.70780.71390.89421.0822
DEPI 1.06990.77731.09350.89671.19470.49761.49280.94350.7824
SGAI 1.01311.24482.53473.15290.26590.82281.30591.04311.1917
LVGI 1.03751.1970.93680.96911.00661.1021.04281.0441.1187
TATA -0.099-0.0293-0.0298-0.0599-0.044-0.3233-0.0921-0.1077-0.1762
M-score -3.47-2.95-2.89-3.34-2.01-3.81-3.22-3.17-4.29

Frontline Ltd Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 10.77881110.5171110
GMI 1.34491.56121.93511.67811.2671.0350.61990.57840.62630.6093
AQI 1.45921.231.44081.34861.42821.43211.20031.26921.74551.3994
SGI 0.67780.66150.70730.81820.93160.96521.09521.09081.07931.0822
DEPI 0.74750.92840.85440.71480.60071.5171.47461.60391.18650.7216
SGAI 1.30320.96970.96040.86251.36211.31751.17951.29431.09511.1917
LVGI 1.10171.04281.05511.12511.13061.0441.07540.99291.08471.1187
TATA -0.3048-0.121-0.1178-0.1271-0.1275-0.1077-0.1361-0.1334-0.1967-0.1853
M-score -3.94-3.18-2.65-2.79-2.97-3.28-3.15-3.12-3.25-4.34
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