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Golar LNG Ltd (NAS:GLNG)
Beneish M-Score
24.68 (As of Today)

Warning Sign:

Beneish M-Score 24.68 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Golar LNG Ltd has a M-score of 24.68 signals that the company is a manipulator.

GLNG' s 10-Year Beneish M-Score Range
Min: -7.96   Max: 1397.79
Current: 24.68

-7.96
1397.79

During the past 13 years, the highest Beneish M-Score of Golar LNG Ltd was 1397.79. The lowest was -7.96. 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 Golar LNG 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 * 30.3306+0.528 * 3.506+0.404 * 0.7846+0.892 * 0.236+0.115 * 2.5622
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 4.2446+4.679 * 0.0369-0.327 * 1.5208
=24.68

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $33.32 Mil.
Revenue was 20.966 + 19.757 + 17.03 + 27.926 = $85.68 Mil.
Gross Profit was 1.085 + 1.932 + 2.256 + 13.835 = $19.11 Mil.
Total Current Assets was $308.02 Mil.
Total Assets was $2,697.31 Mil.
Property, Plant and Equipment(Net PPE) was $1,511.31 Mil.
Depreciation, Depletion and Amortization(DDA) was $40.40 Mil.
Selling, General & Admin. Expense(SGA) was $23.52 Mil.
Total Current Liabilities was $230.91 Mil.
Long-Term Debt was $550.12 Mil.
Net Income was 12.991 + 4.311 + -13.131 + 58.969 = $63.14 Mil.
Non Operating Income was -9.578 + -29.281 + -15.381 + 48 = $-6.24 Mil.
Cash Flow from Operations was -80.964 + 10.248 + 22.837 + 17.73 = $-30.15 Mil.
Accounts Receivable was $4.66 Mil.
Revenue was 35.811 + 99.158 + 121.126 + 106.992 = $363.09 Mil.
Gross Profit was 24.492 + 74.925 + 98.363 + 86.119 = $283.90 Mil.
Total Current Assets was $392.89 Mil.
Total Assets was $2,447.54 Mil.
Property, Plant and Equipment(Net PPE) was $1,039.30 Mil.
Depreciation, Depletion and Amortization(DDA) was $74.29 Mil.
Selling, General & Admin. Expense(SGA) was $23.49 Mil.
Total Current Liabilities was $61.22 Mil.
Long-Term Debt was $404.78 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)
=(33.324 / 85.679) / (4.656 / 363.087)
=0.38894011 / 0.01282337
=30.3306

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)
=(1.932 / 363.087) / (1.085 / 85.679)
=0.78190351 / 0.22301848
=3.506

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 - (308.015 + 1511.307) / 2697.311) / (1 - (392.892 + 1039.304) / 2447.537)
=0.32550529 / 0.41484194
=0.7846

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
=85.679 / 363.087
=0.236

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))
=(74.287 / (74.287 + 1039.304)) / (40.4 / (40.4 + 1511.307))
=0.06670941 / 0.02603584
=2.5622

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)
=(23.524 / 85.679) / (23.486 / 363.087)
=0.27455969 / 0.06468422
=4.2446

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)
=((550.12 + 230.91) / 2697.311) / ((404.784 + 61.215) / 2447.537)
=0.28955875 / 0.19039508
=1.5208

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
=(63.14 - -6.24 - -30.149) / 2697.311
=0.0369

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.

Golar LNG Ltd has a M-score of 24.68 signals that the company is likely to 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.

Golar LNG Ltd Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.42180.4069.60425.95170.81810.49730.76120.37112.00167.4237
GMI 0.98811.01310.97571.08121.22481.08840.82560.8451.00711.8256
AQI 1.0250.95011.02280.92810.83410.96210.45990.8663.7660.8489
SGI 1.23081.04671.40140.93731.01830.94631.12731.22871.36850.2433
DEPI 0.98630.8881.00080.93151.0441.02860.96091.07770.45913.4234
SGAI 0.96421.37810.79761.45650.93831.18391.01491.20060.54273.7718
LVGI 1.01220.99851.00260.97861.02350.93040.91770.88810.41621.14
TATA -0.00040.00130.00260.0066-0.0248-0.0205-0.0081-0.0185-0.04420.0008
M-score -2.80-3.075.841.98-2.69-3.06-2.91-3.07-0.112.89

Golar LNG Ltd Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.37110.16630.59740.11582.001644.4492289.08011521.69597.372330.3306
GMI 0.84480.92630.96140.98771.00730.95591.02051.19621.80833.506
AQI 0.8660.76340.83360.83643.7664.65014.77654.95240.84890.7846
SGI 1.22871.22171.26021.38041.36851.15110.81510.45920.2450.236
DEPI 1.07771.14891.05050.94550.45910.51120.69861.02173.42342.5622
SGAI 1.20060.93890.70670.64940.54270.63890.94041.79423.85934.2446
LVGI 0.88810.92081.03070.92060.41620.31630.2870.34931.141.5208
TATA -0.0185-0.011-0.0219-0.0141-0.0442-0.0202-0.0147-0.0150.02220.0369
M-score -3.07-3.18-2.76-3.01-0.1139.21264.071,397.792.9224.68
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