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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.
During the past 13 years, the highest Beneish M-Score of Golar LNG Ltd was 1397.79. The lowest was -8.00. And the median was -2.66.
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 * 0.7948||+||0.528 * 0.7026||+||0.404 * 0.9437||+||0.892 * 1.4206||+||0.115 * 1.1438|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.639||+||4.679 * -0.0025||-||0.327 * 1.5678|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $37.6 Mil.|
Revenue was 36.526 + 35.272 + 28.834 + 21.084 = $121.7 Mil.
Gross Profit was 6.086 + 10.61 + 11.493 + 6.058 = $34.2 Mil.
Total Current Assets was $579.7 Mil.
Total Assets was $4,255.8 Mil.
Property, Plant and Equipment(Net PPE) was $2,368.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $55.2 Mil.
Selling, General & Admin. Expense(SGA) was $21.4 Mil.
Total Current Liabilities was $598.0 Mil.
Long-Term Debt was $1,334.1 Mil.
Net Income was 21.918 + -39.651 + 7.769 + -24.23 = $-34.2 Mil.
Non Operating Income was -31.381 + -27.841 + 7.077 + -16.335 = $-68.5 Mil.
Cash Flow from Operations was -60.963 + 13.489 + 18.976 + 73.372 = $44.9 Mil.
|Accounts Receivable was $33.3 Mil.
Revenue was 20.966 + 19.758 + 17.03 + 27.926 = $85.7 Mil.
Gross Profit was -1.085 + 1.933 + 2.256 + 13.835 = $16.9 Mil.
Total Current Assets was $308.0 Mil.
Total Assets was $2,697.3 Mil.
Property, Plant and Equipment(Net PPE) was $1,511.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $40.4 Mil.
Selling, General & Admin. Expense(SGA) was $23.5 Mil.
Total Current Liabilities was $230.9 Mil.
Long-Term Debt was $550.1 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(37.627 / 121.716)||/||(33.324 / 85.68)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(10.61 / 85.68)||/||(6.086 / 121.716)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (579.732 + 2368.749) / 4255.799)||/||(1 - (308.015 + 1511.307) / 2697.311)|
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.
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))|
|=||(40.4 / (40.4 + 1511.307))||/||(55.173 / (55.173 + 2368.749))|
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)|
|=||(21.355 / 121.716)||/||(23.525 / 85.68)|
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)|
|=||((1334.072 + 597.959) / 4255.799)||/||((550.12 + 230.91) / 2697.311)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-34.194 - -68.48||-||44.874)||/||4255.799|
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 -2.59 suggests that the company will not be a manipulator.
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
Golar LNG Ltd Annual Data
Golar LNG Ltd Quarterly Data