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Frontline Ltd (NYSE:FRO)
Beneish M-Score
-4.36 (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 -4.36 suggests that the company is not a manipulator.

FRO' s 10-Year Beneish M-Score Range
Min: -4.36   Max: 23.67
Current: -4.36

-4.36
23.67

During the past 13 years, the highest Beneish M-Score of Frontline Ltd was 23.67. The lowest was -4.36. And the median was -2.53.


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+0.528 * 0.7578+0.404 * 1.7455+0.892 * 1.0793+0.115 * 1.193
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 2.6244+4.679 * -0.1967-0.327 * 1.0847
=-4.36

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $0.0 Mil.
Revenue was 135.619 + 118.972 + 169.998 + 143.571 = $568.2 Mil.
Gross Profit was 33.472 + 23.752 + 66.245 + 30.71 = $154.2 Mil.
Total Current Assets was $257.8 Mil.
Total Assets was $1,038.0 Mil.
Property, Plant and Equipment(Net PPE) was $639.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $98.3 Mil.
Selling, General & Admin. Expense(SGA) was $38.3 Mil.
Total Current Liabilities was $324.4 Mil.
Long-Term Debt was $834.1 Mil.
Net Income was -59.647 + -78.23 + -12.085 + -13.031 = $-163.0 Mil.
Non Operating Income was -0.412 + 7.905 + 0.837 + -11.801 = $-3.5 Mil.
Cash Flow from Operations was 17.73 + -0.429 + 21.152 + 6.231 = $44.7 Mil.
Accounts Receivable was $19.9 Mil.
Revenue was 126.494 + 121.222 + 125.903 + 152.781 = $526.4 Mil.
Gross Profit was 33.186 + 13.996 + 24.903 + 36.165 = $108.3 Mil.
Total Current Assets was $277.6 Mil.
Total Assets was $1,409.1 Mil.
Property, Plant and Equipment(Net PPE) was $1,021.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $193.2 Mil.
Selling, General & Admin. Expense(SGA) was $13.5 Mil.
Total Current Liabilities was $134.9 Mil.
Long-Term Debt was $1,315.0 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)
=(0 / 568.16) / (19.914 / 526.4)
=0 / 0.03783055
=0

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)
=(23.752 / 526.4) / (33.472 / 568.16)
=0.2056421 / 0.27136546
=0.7578

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 - (257.833 + 639.058) / 1038.035) / (1 - (277.629 + 1021.741) / 1409.143)
=0.13597229 / 0.07790054
=1.7455

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
=568.16 / 526.4
=1.0793

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))
=(193.174 / (193.174 + 1021.741)) / (98.271 / (98.271 + 639.058))
=0.15900207 / 0.13327972
=1.193

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)
=(38.285 / 568.16) / (13.516 / 526.4)
=0.06738419 / 0.02567629
=2.6244

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)
=((834.12 + 324.364) / 1038.035) / ((1315.032 + 134.886) / 1409.143)
=1.11603559 / 1.02893603
=1.0847

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
=(-162.993 - -3.471 - 44.684) / 1038.035
=-0.1967

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 -4.36 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 1.84570.6341.09510.63941.46231.25371.15420.72160.5581
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 -1.23-3.47-2.95-2.89-3.34-2.01-3.81-3.22-3.17

Frontline Ltd Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 110.76731110.517110
GMI 1.35141.30141.50911.85751.68021.1651.0430.62410.58070.7578
AQI 16.73161.45921.231.44080.12161.42821.43211.20031.26921.7455
SGI 0.69690.68780.67140.71930.81820.93160.96521.09521.09081.0793
DEPI 0.20250.74750.92840.8552.20370.60111.51911.4831.61351.193
SGAI 2.68471.29460.23810.23850.20950.56395.28544.67145.29662.6244
LVGI 1.12341.10171.04281.05511.12511.13061.0441.01920.99291.0847
TATA -0.36-0.3048-0.121-0.1178-0.1271-0.1275-0.1077-0.1361-0.1334-0.1967
M-score 1.68-3.95-3.08-2.55-3.00-2.89-3.95-3.73-3.80-4.36
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