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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 319.06. The lowest was -4.92. And the median was -2.91.
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 * 0.1544||+||0.528 * -1.2474||+||0.404 * 0.972||+||0.892 * 0.9672||+||0.115 * 0.8013|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.8012||+||4.679 * -0.0091||-||0.327 * 1.3294|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $4.5 Mil.|
Revenue was 22.994 + 27.378 + 20.144 + 32.158 = $102.7 Mil.
Gross Profit was -1.984 + 1.475 + -16.081 + -6.086 = $-22.7 Mil.
Total Current Assets was $640.8 Mil.
Total Assets was $4,307.6 Mil.
Property, Plant and Equipment(Net PPE) was $2,349.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $73.7 Mil.
Selling, General & Admin. Expense(SGA) was $33.6 Mil.
Total Current Liabilities was $967.6 Mil.
Long-Term Debt was $1,376.4 Mil.
Net Income was -70.892 + -146.123 + -2.563 + 21.918 = $-197.7 Mil.
Non Operating Income was -22.928 + -94.336 + 54.716 + -31.381 = $-93.9 Mil.
Cash Flow from Operations was 26.915 + -15.384 + -20.649 + -55.531 = $-64.6 Mil.
|Accounts Receivable was $30.0 Mil.
Revenue was 35.272 + 28.834 + 21.084 + 20.966 = $106.2 Mil.
Gross Profit was 10.61 + 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.
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)|
|=||(4.474 / 102.674)||/||(29.967 / 106.156)|
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)|
|=||(1.475 / 106.156)||/||(-1.984 / 102.674)|
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 - (640.773 + 2349.705) / 4307.588)||/||(1 - (742.838 + 1993.431) / 3991.993)|
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))|
|=||(49.811 / (49.811 + 1993.431))||/||(73.732 / (73.732 + 2349.705))|
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)|
|=||(33.566 / 102.674)||/||(19.267 / 106.156)|
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)|
|=||((1376.443 + 967.581) / 4307.588)||/||((1264.356 + 369.69) / 3991.993)|
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|
|=||(-197.66 - -93.929||-||-64.649)||/||4307.588|
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 -4.80 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