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Frontline Ltd (NYSE:FRO)
Beneish M-Score
-2.90 (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 -2.90 suggests that the company is not a manipulator.

FRO' s 10-Year Beneish M-Score Range
Min: -3.79   Max: 23.67
Current: -2.9

-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 -2.86.


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 * 1.4799+0.528 * 0.6093+0.404 * 1.3994+0.892 * 1.0822+0.115 * 0.7905
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1917+4.679 * -0.1783-0.327 * 0.9994
=-2.90

* 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:
Accounts Receivable was $18.9 Mil.
Revenue was 135.099 + 135.619 + 118.972 + 169.998 = $559.7 Mil.
Gross Profit was 52.55 + 41.1 + 23.752 + 66.245 = $183.6 Mil.
Total Current Assets was $233.2 Mil.
Total Assets was $962.2 Mil.
Property, Plant and Equipment(Net PPE) was $622.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $80.8 Mil.
Selling, General & Admin. Expense(SGA) was $40.8 Mil.
Total Current Liabilities was $328.6 Mil.
Long-Term Debt was $592.2 Mil.
Net Income was -12.976 + -59.647 + -78.23 + -12.085 = $-162.9 Mil.
Non Operating Income was -55.153 + -0.412 + 7.905 + 0.837 = $-46.8 Mil.
Cash Flow from Operations was 16.96 + 17.73 + -0.429 + 21.152 = $55.4 Mil.
Accounts Receivable was $11.8 Mil.
Revenue was 143.571 + 126.494 + 121.222 + 125.903 = $517.2 Mil.
Gross Profit was 40.18 + 24.322 + 13.996 + 24.903 = $103.4 Mil.
Total Current Assets was $260.2 Mil.
Total Assets was $1,367.6 Mil.
Property, Plant and Equipment(Net PPE) was $999.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $99.8 Mil.
Selling, General & Admin. Expense(SGA) was $31.6 Mil.
Total Current Liabilities was $130.8 Mil.
Long-Term Debt was $1,178.8 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)
=(18.943 / 559.688) / (11.828 / 517.19)
=0.03384564 / 0.02286974
=1.4799

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)
=(41.1 / 517.19) / (52.55 / 559.688)
=0.19992846 / 0.32812388
=0.6093

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 - (233.243 + 622.438) / 962.179) / (1 - (260.153 + 999.28) / 1367.605)
=0.11068419 / 0.07909594
=1.3994

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
=559.688 / 517.19
=1.0822

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))
=(99.823 / (99.823 + 999.28)) / (80.794 / (80.794 + 622.438))
=0.09082224 / 0.11488954
=0.7905

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)
=(40.787 / 559.688) / (31.628 / 517.19)
=0.07287453 / 0.06115354
=1.1917

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)
=((592.192 + 328.588) / 962.179) / ((1178.79 + 130.772) / 1367.605)
=0.9569737 / 0.95755865
=0.9994

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
=(-162.938 - -46.823 - 55.413) / 962.179
=-0.1783

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 -2.90 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 0.6341.09510.63941.46231.25371.15420.72160.55811.4799
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 1.06990.77731.09350.89671.19470.49761.49280.96370.7847
SGAI 1.01311.24482.53473.15290.26590.82281.30591.04311.1917
LVGI 1.03751.1970.93680.96911.00661.1021.04281.0440.9994
TATA -0.099-0.0293-0.0298-0.0599-0.044-0.3233-0.0921-0.1077-0.1783
M-score -3.47-2.95-2.89-3.34-2.01-3.81-3.22-3.17-2.90

Frontline Ltd Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 10.77881110.5171111.4799
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 0.74750.92840.85440.71480.60071.54951.5071.64081.21160.7905
SGAI 1.30320.96970.96040.86251.36211.31751.17951.29431.09511.1917
LVGI 1.10171.04281.05511.12511.13061.0441.07540.99291.08470.9994
TATA -0.3048-0.121-0.1178-0.1271-0.1275-0.1077-0.1361-0.1334-0.1967-0.1783
M-score -3.94-3.18-2.65-2.79-2.97-3.27-3.15-3.11-3.25-2.90
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