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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 -2.75.
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 * 1.9371||+||0.528 * 2.829||+||0.404 * 0.5792||+||0.892 * 0.5038||+||0.115 * 1.8248|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.9342||+||4.679 * -0.0042||-||0.327 * 1.59|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $32.1 Mil.|
Revenue was 28.834 + 21.084 + 20.966 + 19.758 = $90.6 Mil.
Gross Profit was 11.493 + 6.058 + 1.085 + 1.933 = $20.6 Mil.
Total Current Assets was $447.1 Mil.
Total Assets was $3,617.7 Mil.
Property, Plant and Equipment(Net PPE) was $2,259.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $46.2 Mil.
Selling, General & Admin. Expense(SGA) was $22.5 Mil.
Total Current Liabilities was $140.3 Mil.
Long-Term Debt was $999.3 Mil.
Net Income was 7.769 + -24.23 + 12.991 + 4.311 = $0.8 Mil.
Non Operating Income was 7.077 + -16.335 + -9.578 + 13.295 = $-5.5 Mil.
Cash Flow from Operations was 18.976 + 73.372 + -80.964 + 10.248 = $21.6 Mil.
|Accounts Receivable was $32.8 Mil.
Revenue was 17.03 + 27.926 + 35.811 + 99.158 = $179.9 Mil.
Gross Profit was 2.256 + 13.835 + 24.492 + 74.925 = $115.5 Mil.
Total Current Assets was $132.7 Mil.
Total Assets was $2,427.2 Mil.
Property, Plant and Equipment(Net PPE) was $1,238.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $47.1 Mil.
Selling, General & Admin. Expense(SGA) was $23.1 Mil.
Total Current Liabilities was $78.5 Mil.
Long-Term Debt was $402.4 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)|
|=||(32.051 / 90.642)||/||(32.843 / 179.925)|
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)|
|=||(6.058 / 179.925)||/||(11.493 / 90.642)|
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 - (447.141 + 2259.109) / 3617.682)||/||(1 - (132.704 + 1238.741) / 2427.239)|
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))|
|=||(47.061 / (47.061 + 1238.741))||/||(46.239 / (46.239 + 2259.109))|
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)|
|=||(22.483 / 90.642)||/||(23.073 / 179.925)|
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)|
|=||((999.275 + 140.301) / 3617.682)||/||((402.413 + 78.461) / 2427.239)|
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|
|=||(0.841 - -5.541||-||21.632)||/||3617.682|
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 -1.54 signals that the company is likely to 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