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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.
Frontline Ltd has a M-score of -3.85 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Frontline Ltd was 13.62. The lowest was -4.24. And the median was -2.49.
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 Frontline 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||+||0.528 * 0.5072||+||0.404 * 1.2003||+||0.892 * 1.224||+||0.115 * 1.9344|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 6.9355||+||4.679 * -0.1008||-||0.327 * 1.0192|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was Kr262 Mil.|
Revenue was 1017.95209581 + 886.240740741 + 695.011904762 + 1017.24698795 = Kr3,616 Mil.
Gross Profit was 396.676646707 + 248.024691358 + 61.9880952381 + 427.855421687 = Kr1,135 Mil.
Total Current Assets was Kr1,981 Mil.
Total Assets was Kr8,228 Mil.
Property, Plant and Equipment(Net PPE) was Kr5,605 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr326 Mil.
Selling, General & Admin. Expense(SGA) was Kr330 Mil.
Total Current Liabilities was Kr1,040 Mil.
Long-Term Debt was Kr6,699 Mil.
Net Income was -72.3652694611 + -80.4382716049 + -216.94047619 + -146.662650602 = Kr-516 Mil.
Non Operating Income was 5.0119760479 + -72.8456790123 + 38.0119047619 + -8.90963855422 = Kr-39 Mil.
Cash Flow from Operations was 126.658682635 + 38.462962963 + -18.5238095238 + 205.331325301 = Kr352 Mil.
|Accounts Receivable was Kr0 Mil.
Revenue was 727.76300578 + 848.783333333 + 643.422857143 + 734.678787879 = Kr2,955 Mil.
Gross Profit was 143.947976879 + 200.916666667 + 39.24 + 86.0545454545 = Kr470 Mil.
Total Current Assets was Kr1,771 Mil.
Total Assets was Kr9,154 Mil.
Property, Plant and Equipment(Net PPE) was Kr6,788 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr808 Mil.
Selling, General & Admin. Expense(SGA) was Kr39 Mil.
Total Current Liabilities was Kr719 Mil.
Long-Term Debt was Kr7,730 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)|
|=||(262.173652695 / 3616.45172926)||/||(0 / 2954.64798414)|
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)|
|=||(248.024691358 / 2954.64798414)||/||(396.676646707 / 3616.45172926)|
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 - (1980.73652695 + 5605.21556886) / 8228.02994012)||/||(1 - (1771.19653179 + 6787.79190751) / 9154.13294798)|
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))|
|=||(808.345757576 / (808.345757576 + 6787.79190751))||/||(326.304477168 / (326.304477168 + 5605.21556886))|
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)|
|=||(330.165088386 / 3616.45172926)||/||(38.8937000058 / 2954.64798414)|
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)|
|=||((6699.4011976 + 1040.4491018) / 8228.02994012)||/||((7730.31213873 + 718.699421965) / 9154.13294798)|
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|
|=||(-516.406667859 - -38.7314367568||-||351.929161375)||/||8228.02994012|
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.
Frontline Ltd has a M-score of -3.85 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
Frontline Ltd Annual Data
Frontline Ltd Quarterly Data