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

Warning Sign:

Beneish M-Score 44.28 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 44.28 signals that the company is a manipulator.

GLNG' s 10-Year Beneish M-Score Range
Min: -3.16   Max: 44.28
Current: 44.28

-3.16
44.28

During the past 13 years, the highest Beneish M-Score of Golar LNG Ltd was 44.28. The lowest was -3.16. And the median was -2.72.


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 * 51.6621+0.528 * 1.5352+0.404 * 0.9271+0.892 * 1.056+0.115 * 0.9359
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7715+4.679 * -0.0054-0.327 * 1.501
=44.28

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $4.4 Mil.
Revenue was 35.271 + 28.834 + 21.084 + 20.966 = $106.2 Mil.
Gross Profit was 10.609 + 11.493 + 6.058 + 1.085 = $29.2 Mil.
Total Current Assets was $742.8 Mil.
Total Assets was $3,992.0 Mil.
Property, Plant and Equipment(Net PPE) was $1,993.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $49.8 Mil.
Selling, General & Admin. Expense(SGA) was $19.3 Mil.
Total Current Liabilities was $369.7 Mil.
Long-Term Debt was $1,264.4 Mil.
Net Income was -39.651 + 7.769 + -24.23 + 12.991 = $-43.1 Mil.
Non Operating Income was -27.774 + 7.077 + -16.335 + -9.578 = $-46.6 Mil.
Cash Flow from Operations was 13.489 + 18.976 + 73.372 + -80.964 = $24.9 Mil.
Accounts Receivable was $0.1 Mil.
Revenue was 19.758 + 17.03 + 27.926 + 35.811 = $100.5 Mil.
Gross Profit was 1.933 + 2.256 + 13.835 + 24.492 = $42.5 Mil.
Total Current Assets was $181.7 Mil.
Total Assets was $2,665.2 Mil.
Property, Plant and Equipment(Net PPE) was $1,579.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $36.9 Mil.
Selling, General & Admin. Expense(SGA) was $23.6 Mil.
Total Current Liabilities was $90.6 Mil.
Long-Term Debt was $636.2 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)
=(4.419 / 106.155) / (0.081 / 100.525)
=0.04162781 / 0.00080577
=51.6621

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)
=(11.493 / 100.525) / (10.609 / 106.155)
=0.42293957 / 0.27549338
=1.5352

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 - (742.838 + 1993.431) / 3991.993) / (1 - (181.696 + 1579.24) / 2665.221)
=0.31456067 / 0.33929081
=0.9271

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
=106.155 / 100.525
=1.056

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))
=(36.871 / (36.871 + 1579.24)) / (49.811 / (49.811 + 1993.431))
=0.02281465 / 0.02437841
=0.9359

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)
=(19.267 / 106.155) / (23.649 / 100.525)
=0.18149875 / 0.23525491
=0.7715

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)
=((1264.356 + 369.69) / 3991.993) / ((636.244 + 90.574) / 2665.221)
=0.40933088 / 0.27270459
=1.501

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
=(-43.121 - -46.61 - 24.873) / 3991.993
=-0.0054

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 44.28 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.58638.48777.06070.30080.73411.19040.27250.10650.864851.304
GMI 1.01310.97571.08121.03741.28510.82560.8451.00711.82561.5206
AQI 0.95011.02280.92810.83410.96210.45990.8663.7660.84890.9271
SGI 1.04671.40140.93731.36590.70551.12731.22871.36850.24331.0634
DEPI 0.8881.00080.93151.0441.02860.96091.07770.45913.42340.9359
SGAI 1.37810.79761.45650.69951.5881.01491.20060.54273.77180.7894
LVGI 0.99851.00260.97861.02350.93040.91770.88810.41621.141.501
TATA 0.00130.00260.0066-0.0248-0.0205-0.0081-0.0185-0.04420.0008-0.0054
M-score -2.904.813.01-2.91-3.02-2.52-3.16-1.85-3.1443.94

Golar LNG Ltd Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.11580.106544.4492289.08011521.69590.858830.33020.15511.937151.6622
GMI 0.98771.00730.95591.02051.19621.80823.50595.18352.8291.5352
AQI 0.83643.7664.65014.77654.95240.84890.78460.6310.57920.9271
SGI 1.38041.36851.15110.81510.45920.2450.2360.27760.50381.056
DEPI 0.94550.45910.51120.69861.02173.42342.56222.30171.82480.9359
SGAI 0.64940.54270.63890.94041.79423.85944.24473.60821.93420.7715
LVGI 0.92060.41620.31630.2870.34931.141.52081.41931.591.501
TATA -0.0141-0.0442-0.0202-0.0147-0.0150.00620.0211-0.0052-0.0042-0.0054
M-score -3.01-1.8539.21264.071,397.79-3.1524.61-2.30-1.5444.28
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