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Frontline Ltd (NYSE:FRO)
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.

Frontline Ltd has a M-score of -3.05 suggests that the company is not a manipulator.

FRO' s 10-Year Beneish M-Score Range
Min: -6.1   Max: 13.62
Current: -3.05

-6.1
13.62

During the past 13 years, the highest Beneish M-Score of Frontline Ltd was 13.62. The lowest was -6.10. And the median was -2.69.


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 * 0.842+0.404 * 1.2003+0.892 * 0.9483+0.115 * 1.6102
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.6866+4.679 * -0.1006-0.327 * 1.0192
=-3.05

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $43.8 Mil.
Revenue was 169.998 + 143.571 + 116.762 + 168.863 = $599.2 Mil.
Gross Profit was 66.245 + 40.18 + 10.414 + 71.024 = $187.9 Mil.
Total Current Assets was $330.8 Mil.
Total Assets was $1,374.1 Mil.
Property, Plant and Equipment(Net PPE) was $936.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $53.6 Mil.
Selling, General & Admin. Expense(SGA) was $54.4 Mil.
Total Current Liabilities was $173.8 Mil.
Long-Term Debt was $1,118.8 Mil.
Net Income was -12.085 + -13.031 + -36.446 + -24.346 = $-85.9 Mil.
Non Operating Income was 0.837 + -11.801 + 6.386 + -1.479 = $-6.1 Mil.
Cash Flow from Operations was 21.152 + 6.231 + -3.112 + 34.085 = $58.4 Mil.
Accounts Receivable was $0.0 Mil.
Revenue was 125.903 + 197.436 + 126.809 + 181.711 = $631.9 Mil.
Gross Profit was 24.903 + 65.312 + 7.376 + 69.205 = $166.8 Mil.
Total Current Assets was $306.4 Mil.
Total Assets was $1,583.7 Mil.
Property, Plant and Equipment(Net PPE) was $1,174.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $112.1 Mil.
Selling, General & Admin. Expense(SGA) was $34.0 Mil.
Total Current Liabilities was $124.3 Mil.
Long-Term Debt was $1,337.3 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)
=(43.783 / 599.194) / (0 / 631.859)
=0.07306982 / 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)
=(40.18 / 631.859) / (66.245 / 599.194)
=0.26397662 / 0.31352617
=0.842

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 - (330.783 + 936.071) / 1374.081) / (1 - (306.417 + 1174.288) / 1583.665)
=0.07803543 / 0.06501375
=1.2003

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
=599.194 / 631.859
=0.9483

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))
=(112.123 / (112.123 + 1174.288)) / (53.568 / (53.568 + 936.071))
=0.08715955 / 0.05412883
=1.6102

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)
=(54.352 / 599.194) / (33.982 / 631.859)
=0.09070852 / 0.05378099
=1.6866

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)
=((1118.8 + 173.755) / 1374.081) / ((1337.344 + 124.335) / 1583.665)
=0.94066871 / 0.92297235
=1.0192

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
=(-85.908 - -6.057 - 58.356) / 1374.081
=-0.1006

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 -3.05 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.

Frontline Ltd Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.45070.73331.04751.2330.50132.78310.61131.43070.7381.0172
GMI 0.77781.06321.10411.13830.98330.86871.04211.9671.19041.2818
AQI 0.60210.72741.57870.029234.93440.50181.27041.33041.231.4321
SGI 1.58090.81581.04630.82071.7280.50591.05260.65970.84660.7741
DEPI 0.82041.01140.97190.781.08980.89671.19470.49761.49280.959
SGAI 0.91061.00811.45361.37710.55993.57272.93960.27981.10121.205
LVGI 0.99681.04090.99121.1970.93680.96911.00661.1021.04281.044
TATA 0.0242-0.0967-0.0711-0.0293-0.0253-0.0591-0.0392-0.3347-0.0921-0.1077
M-score -1.72-3.43-2.52-3.0411.40-2.27-3.16-3.28-3.07-2.90

Frontline Ltd Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.45291110.72121110.9551
GMI 1.90111.90331.40771.29531.01641.09161.15731.02091.17650.842
AQI 1.33041.30791.50891.45921.231.440811.22641.42821.43211.2003
SGI 0.64970.65140.73470.7520.86640.89050.90510.95630.82450.9483
DEPI 0.49760.5540.61550.71951.49281.38840.41111.31171.1831.6102
SGAI 0.3580.16280.22740.521.09892.23783.98071.90461.92131.6866
LVGI 1.1021.11281.12341.10171.04281.05511.12511.13061.0441.0192
TATA -0.3392-0.3578-0.3492-0.2945-0.0921-0.087-0.0939-0.093-0.0721-0.1006
M-score -3.33-3.81-3.88-3.72-3.16-2.940.59-2.93-2.90-3.05
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