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Frontline Ltd (NYSE:FRO)
Beneish M-Score
-3.61 (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 -3.62 suggests that the company is not a manipulator.

FRO' s Beneish M-Score Range Over the Past 10 Years
Min: -4.22   Max: 23.67
Current: -3.61

-4.22
23.67

During the past 13 years, the highest Beneish M-Score of Frontline Ltd was 23.67. The lowest was -4.22. And the median was -2.63.


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 * 0.575+0.404 * 0.7913+0.892 * 0.943+0.115 * 1.3846
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 2.1529+4.679 * -0.1568-0.327 * 0.6569
=-3.62

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $0.0 Mil.
Revenue was 121.513 + 134.777 + 144.377 + 135.099 = $535.8 Mil.
Gross Profit was 66.947 + 78.764 + 82.624 + 52.55 = $280.9 Mil.
Total Current Assets was $217.3 Mil.
Total Assets was $851.2 Mil.
Property, Plant and Equipment(Net PPE) was $542.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $57.2 Mil.
Selling, General & Admin. Expense(SGA) was $77.7 Mil.
Total Current Liabilities was $159.7 Mil.
Long-Term Debt was $464.3 Mil.
Net Income was 17.427 + 17.37 + 31.124 + -12.976 = $52.9 Mil.
Non Operating Income was 11.013 + -3.326 + 6.409 + 25.541 = $39.6 Mil.
Cash Flow from Operations was 43.121 + 45.698 + 42.972 + 14.941 = $146.7 Mil.
Accounts Receivable was $0.0 Mil.
Revenue was 135.619 + 118.972 + 169.998 + 143.571 = $568.2 Mil.
Gross Profit was 41.1 + 23.752 + 66.245 + 40.18 = $171.3 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 $97.3 Mil.
Selling, General & Admin. Expense(SGA) was $38.3 Mil.
Total Current Liabilities was $324.4 Mil.
Long-Term Debt was $834.1 Mil.



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 / 535.766) / (0 / 568.16)
=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)
=(78.764 / 568.16) / (66.947 / 535.766)
=0.3014591 / 0.52426806
=0.575

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 - (217.322 + 542.25) / 851.154) / (1 - (257.833 + 639.058) / 1038.035)
=0.10759745 / 0.13597229
=0.7913

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
=535.766 / 568.16
=0.943

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))
=(97.285 / (97.285 + 639.058)) / (57.202 / (57.202 + 542.25))
=0.13211913 / 0.09542382
=1.3846

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)
=(77.726 / 535.766) / (38.285 / 568.16)
=0.14507453 / 0.06738419
=2.1529

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)
=((464.336 + 159.695) / 851.154) / ((834.12 + 324.364) / 1038.035)
=0.73315875 / 1.11603559
=0.6569

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
=(52.945 - 39.637 - 146.732) / 851.154
=-0.1568

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 -3.62 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 1.06990.77731.09350.89671.19470.49761.49280.96370.766
SGAI 1.01311.24482.53473.15290.26590.82281.30591.04311.1917
LVGI 1.03751.1970.93680.96911.00661.1021.04281.0440.9994
TATA -0.099-0.0293-0.0298-0.0599-0.044-0.3233-0.0921-0.1077-0.2273
M-score -3.47-2.95-2.89-3.34-2.01-3.81-3.22-3.17-3.13

Frontline Ltd Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 110.5171101.479911.37321
GMI 1.67811.2671.0350.61990.57840.62630.60930.68850.59590.575
AQI 1.34861.42821.43211.20031.26921.74551.39941.4481.0870.7913
SGI 0.81820.93160.96521.09521.09081.07931.08220.95150.98360.943
DEPI 1.2111.01660.92030.88440.96220.71160.7660.88030.83991.3846
SGAI 1.14971.02730.98730.88480.97091.09511.19171.35862.19752.1529
LVGI 1.12511.13061.0441.07541.04891.08470.99941.00540.60370.6569
TATA -0.1271-0.1275-0.1077-0.1361-0.1334-0.1967-0.26-0.2452-0.199-0.1568
M-score -2.78-2.87-3.29-3.17-3.15-4.22-3.29-3.73-3.36-3.62
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