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Frontline Ltd (NYSE:FRO)
Beneish M-Score
-2.86 (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 -2.85 suggests that the company is not a manipulator.

FRO' s Beneish M-Score Range Over the Past 10 Years
Min: -4.23   Max: 23.67
Current: -2.86

-4.23
23.67

During the past 13 years, the highest Beneish M-Score of Frontline Ltd was 23.67. The lowest was -4.23. And the median was -2.59.


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 * 0.5978+0.404 * 0.4255+0.892 * 1.2262+0.115 * 1.4176
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3472+4.679 * -0.0086-0.327 * 1.2454
=-2.85

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $0.0 Mil.
Revenue was 227.103 + 58.267 + 121.513 + 185.636 = $592.5 Mil.
Gross Profit was 148.068 + 13.149 + 66.947 + 112.65 = $340.8 Mil.
Total Current Assets was $446.0 Mil.
Total Assets was $2,979.5 Mil.
Property, Plant and Equipment(Net PPE) was $2,270.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $83.5 Mil.
Selling, General & Admin. Expense(SGA) was $54.5 Mil.
Total Current Liabilities was $226.5 Mil.
Long-Term Debt was $1,282.9 Mil.
Net Income was 78.906 + 88.703 + 17.427 + 37.456 = $222.5 Mil.
Non Operating Income was -9.889 + -28.204 + 11.013 + 3.872 = $-23.2 Mil.
Cash Flow from Operations was 121.468 + 67.856 + 43.121 + 39.026 = $271.5 Mil.
Accounts Receivable was $0.0 Mil.
Revenue was 93.518 + 135.099 + 135.619 + 118.972 = $483.2 Mil.
Gross Profit was 48.738 + 52.55 + 41.1 + 23.752 = $166.1 Mil.
Total Current Assets was $210.5 Mil.
Total Assets was $1,863.7 Mil.
Property, Plant and Equipment(Net PPE) was $1,265.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $67.0 Mil.
Selling, General & Admin. Expense(SGA) was $33.0 Mil.
Total Current Liabilities was $181.4 Mil.
Long-Term Debt was $576.8 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)
=(0 / 592.519) / (0 / 483.208)
=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)
=(166.14 / 483.208) / (340.814 / 592.519)
=0.34382709 / 0.57519506
=0.5978

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 - (445.952 + 2269.992) / 2979.513) / (1 - (210.539 + 1265.654) / 1863.692)
=0.08846043 / 0.20792009
=0.4255

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
=592.519 / 483.208
=1.2262

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))
=(67.037 / (67.037 + 1265.654)) / (83.509 / (83.509 + 2269.992))
=0.05030198 / 0.03548288
=1.4176

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)
=(54.531 / 592.519) / (33.011 / 483.208)
=0.09203249 / 0.06831634
=1.3472

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)
=((1282.901 + 226.505) / 2979.513) / ((576.754 + 181.356) / 1863.692)
=0.50659487 / 0.40677859
=1.2454

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
=(222.492 - -23.208 - 271.471) / 2979.513
=-0.0086

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 -2.85 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.7851.21420.58611.46231.19961.23830.60850.64461.47993.6933
GMI 1.10411.13830.98330.86871.04211.9671.19041.28180.60930.6236
AQI 3.68521.7870.57070.50181.27041.33041.231.43211.39940.8436
SGI 1.04630.82071.7280.50591.05260.65970.84660.77411.08220.82
DEPI 0.96750.781.08980.89671.19470.49761.49280.9590.78864.8452
SGAI 1.45361.37710.55993.57272.93960.27981.10121.2051.19170.3164
LVGI 1.00131.1970.93680.96911.00661.1021.04281.0440.99940.5204
TATA -0.0711-0.0293-0.0253-0.0599-0.0392-0.3347-0.0921-0.1077-0.1783-0.0132
M-score -1.91-2.34-2.41-3.49-2.61-3.45-3.19-3.24-2.900.23

Frontline Ltd Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.59571101.601611.373213.69331
GMI 1.17670.83490.90410.92090.79060.89850.59590.5750.62360.5978
AQI 1.43211.20031.26921.74551.39942.66441.0870.79130.84360.4255
SGI 0.83770.96340.91070.92610.80030.98360.9430.821.2262
DEPI 3.11813.22044.50832.80770.23160.51310.1880.37074.6761.4176
SGAI 0.57940.66121.13861.24961.26111.25072.19752.15291.34711.3472
LVGI 1.0441.07540.99291.08470.99940.40980.63770.65690.52041.2454
TATA -0.0721-0.1006-0.1334-0.1967-0.1783-0.094-0.1089-0.0643-0.0107-0.0086
M-score -2.76-2.70-2.74-3.99-2.84-2.39-3.02-3.300.05-2.85
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