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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 -4.03 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Frontline Ltd was 13.62. The lowest was -4.24. And the median was -2.49.
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 * 0.5112||+||0.404 * 1.2003||+||0.892 * 1.1691||+||0.115 * 1.9972|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 7.7442||+||4.679 * -0.1006||-||0.327 * 1.0192|
|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 + 152.781 + 112.599 + 121.222 = $512.5 Mil.
Gross Profit was 24.903 + 36.165 + 6.867 + 14.199 = $82.1 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 $142.3 Mil.
Selling, General & Admin. Expense(SGA) was $6.0 Mil.
Total Current Liabilities was $124.3 Mil.
Long-Term Debt was $1,337.3 Mil.
1. DSRI = Days Sales in Receivables Index
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 / 512.505)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(40.18 / 512.505)||/||(66.245 / 599.194)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|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)|
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.
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 + 1174.288))||/||(53.568 / (53.568 + 936.071))|
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)||/||(6.003 / 512.505)|
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)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-85.908 - -6.057||-||58.356)||/||1374.081|
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 -4.03 suggests that the company will not be a manipulator.
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
Frontline Ltd Annual Data
Frontline Ltd Quarterly Data