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Frontline Ltd (NYSE:FRO)
Beneish M-Score
-4.22 (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 -4.29 suggests that the company is not a manipulator.

FRO' s 10-Year Beneish M-Score Range
Min: -4.22   Max: 13.62
Current: -4.22

-4.22
13.62

During the past 13 years, the highest Beneish M-Score of Frontline Ltd was 13.62. The lowest was -4.22. And the median was -2.44.


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 * 0.7601+0.528 * 0.7854+0.404 * 1.4321+0.892 * 1.0359+0.115 * 1.1115
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 8.7942+4.679 * -0.0721-0.327 * 1.044
=-4.29

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $37.5 Mil.
Revenue was 143.571 + 116.762 + 168.863 + 125.903 = $555.1 Mil.
Gross Profit was 40.18 + 10.414 + 71.024 + 24.903 = $146.5 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 $126.6 Mil.
Selling, General & Admin. Expense(SGA) was $53.7 Mil.
Total Current Liabilities was $130.8 Mil.
Long-Term Debt was $1,178.8 Mil.
Net Income was -13.031 + -36.446 + -24.346 + -18.755 = $-92.6 Mil.
Non Operating Income was -11.801 + 6.386 + -1.479 + 4.323 = $-2.6 Mil.
Cash Flow from Operations was 6.231 + -3.112 + 34.085 + -28.648 = $8.6 Mil.
Accounts Receivable was $47.6 Mil.
Revenue was 152.781 + 112.599 + 121.222 + 149.253 = $535.9 Mil.
Gross Profit was 36.165 + 6.867 + 14.199 + 53.855 = $111.1 Mil.
Total Current Assets was $392.0 Mil.
Total Assets was $1,688.2 Mil.
Property, Plant and Equipment(Net PPE) was $1,202.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $171.9 Mil.
Selling, General & Admin. Expense(SGA) was $5.9 Mil.
Total Current Liabilities was $186.6 Mil.
Long-Term Debt was $1,361.8 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)
=(37.495 / 555.099) / (47.617 / 535.855)
=0.06754651 / 0.08886173
=0.7601

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)
=(10.414 / 535.855) / (40.18 / 555.099)
=0.20730608 / 0.26395472
=0.7854

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 - (260.153 + 999.28) / 1367.605) / (1 - (392.03 + 1202.948) / 1688.221)
=0.07909594 / 0.05523151
=1.4321

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
=555.099 / 535.855
=1.0359

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))
=(171.868 / (171.868 + 1202.948)) / (126.634 / (126.634 + 999.28))
=0.12501164 / 0.11247218
=1.1115

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)
=(53.713 / 555.099) / (5.896 / 535.855)
=0.09676292 / 0.01100298
=8.7942

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)
=((1178.79 + 130.772) / 1367.605) / ((1361.782 + 186.621) / 1688.221)
=0.95755865 / 0.91718027
=1.044

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
=(-92.578 - -2.571 - 8.556) / 1367.605
=-0.0721

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 -4.29 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 0.79351.06990.77731.09350.89671.19470.49761.49280.959
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

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 11.36511110.93061110.7601
GMI 1.76121.62061.45551.35141.30141.50911.85751.08270.94870.7854
AQI 1.64941.33041.307916.73161.45921.231.44081.01241.42821.4321
SGI 0.67850.69140.6740.69690.68780.67140.71930.89430.99871.0359
DEPI 0.93150.49760.5540.20250.74751.04510.96390.93590.76531.1115
SGAI 0.32590.68261.8562.66181.27930.22640.2271.00611.0298.7942
LVGI 1.03851.1021.11281.12341.10171.04281.05511.12511.13061.044
TATA -0.0997-0.3233-0.3417-0.36-0.3048-0.121-0.1178-0.0939-0.093-0.0721
M-score -2.47-3.51-4.241.69-3.95-2.92-2.54-3.01-2.85-4.29
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