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Frontline Ltd (NYSE:FRO)
Beneish M-Score
-3.86 (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 -3.86 suggests that the company is not a manipulator.

FRO' s 10-Year Beneish M-Score Range
Min: -4.24   Max: 25.12
Current: -3.86

-4.24
25.12

During the past 13 years, the highest Beneish M-Score of Frontline Ltd was 25.12. The lowest was -4.24. And the median was -2.50.


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 * 0.5784+0.404 * 1.2692+0.892 * 1.0908+0.115 * 1.1524
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 5.2966+4.679 * -0.1334-0.327 * 0.9929
=-3.86

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $49.0 Mil.
Revenue was 118.972 + 169.998 + 143.571 + 126.494 = $559.0 Mil.
Gross Profit was 23.752 + 66.245 + 40.18 + 24.322 = $154.5 Mil.
Total Current Assets was $240.0 Mil.
Total Assets was $1,251.8 Mil.
Property, Plant and Equipment(Net PPE) was $898.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $102.2 Mil.
Selling, General & Admin. Expense(SGA) was $35.3 Mil.
Total Current Liabilities was $323.1 Mil.
Long-Term Debt was $917.2 Mil.
Net Income was -78.23 + -12.085 + -13.031 + -36.446 = $-139.8 Mil.
Non Operating Income was 7.905 + 0.837 + -11.801 + 6.386 = $3.3 Mil.
Cash Flow from Operations was -0.429 + 21.152 + 6.231 + -3.112 = $23.8 Mil.
Accounts Receivable was $0.0 Mil.
Revenue was 121.222 + 125.903 + 152.781 + 112.599 = $512.5 Mil.
Gross Profit was 13.996 + 24.903 + 36.165 + 6.867 = $81.9 Mil.
Total Current Assets was $296.2 Mil.
Total Assets was $1,468.2 Mil.
Property, Plant and Equipment(Net PPE) was $1,067.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $142.3 Mil.
Selling, General & Admin. Expense(SGA) was $6.1 Mil.
Total Current Liabilities was $130.3 Mil.
Long-Term Debt was $1,335.0 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)
=(48.999 / 559.035) / (0 / 512.505)
=0.08764925 / 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)
=(66.245 / 512.505) / (23.752 / 559.035)
=0.15986381 / 0.27636731
=0.5784

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 - (240.039 + 898.677) / 1251.802) / (1 - (296.22 + 1067.469) / 1468.189)
=0.09033857 / 0.07117612
=1.2692

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
=559.035 / 512.505
=1.0908

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))
=(142.334 / (142.334 + 1067.469)) / (102.184 / (102.184 + 898.677))
=0.11765056 / 0.1020961
=1.1524

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)
=(35.266 / 559.035) / (6.104 / 512.505)
=0.06308371 / 0.01191013
=5.2966

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)
=((917.249 + 323.14) / 1251.802) / ((1334.963 + 130.281) / 1468.189)
=0.99088274 / 0.99799413
=0.9929

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
=(-139.792 - 3.327 - 23.842) / 1251.802
=-0.1334

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 -3.86 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 1.44120.73671.1120.54682.78310.63891.33350.87520.8806
GMI 0.77581.064900.89361.02541.34631.43781.22381.3204
AQI 0.36820.86531.7870.57070.50181.27041.33041.231.4321
SGI 1.58950.81170.911.5840.50591.00720.70780.71390.8942
DEPI 0.79351.06990.77731.09350.89671.19470.49761.49280.9435
SGAI 0.76691.01311.24482.53473.15290.26590.82281.30591.0431
LVGI 0.99741.03751.1970.93680.96911.00661.1021.04281.044
TATA 0.0645-0.099-0.0293-0.0298-0.0599-0.044-0.3233-0.0921-0.1077
M-score -1.60-3.38-2.94-2.98-2.12-2.57-3.64-3.08-2.87

Frontline Ltd Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1110.93061110.815811
GMI 1.45551.35141.30141.50911.85751.68021.26891.03690.62150.5784
AQI 1.307916.73161.45921.231.44080.12161.42821.43211.20031.2692
SGI 0.6740.69690.68780.67140.71930.81820.93160.96521.09521.0908
DEPI 0.5540.20250.74751.04511.11942.87550.9291.09240.89181.1524
SGAI 1.8562.68471.29460.23810.23850.20950.16885.28544.67145.2966
LVGI 1.11281.12341.10171.04281.05511.12511.13061.0441.01920.9929
TATA -0.3417-0.36-0.3048-0.121-0.1178-0.1271-0.1275-0.1077-0.1361-0.1334
M-score -4.241.68-3.95-2.92-2.52-2.92-2.73-3.73-3.80-3.86
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