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Beneish M-Score 2.09 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.
During the past 13 years, the highest Beneish M-Score of Frontline Ltd was 23.67. The lowest was -4.35. And the median was -2.41.
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 * 1.357||+||0.404 * 0.9099||+||0.892 * 5.488||+||0.115 * -0.3051|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * -0.3717||+||4.679 * -0.0534||-||0.327 * 0.7104|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was Kr0 Mil.|
Revenue was 1288.17213115 + 1592.65780731 + 1924.60169492 + 1339.33043478 = Kr6,145 Mil.
Gross Profit was 608.901639344 + 908.920265781 + 1254.81355932 + 805.72173913 = Kr3,578 Mil.
Total Current Assets was Kr2,354 Mil.
Total Assets was Kr23,958 Mil.
Property, Plant and Equipment(Net PPE) was Kr19,259 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr1,110 Mil.
Selling, General & Admin. Expense(SGA) was Kr281 Mil.
Total Current Liabilities was Kr1,588 Mil.
Long-Term Debt was Kr10,889 Mil.
Net Income was 44.8442622951 + 118.870431894 + 668.694915254 + 509.2 = Kr1,342 Mil.
Non Operating Income was 4.02459016393 + -82.5996677741 + -83.8050847458 + -84.4 = Kr-247 Mil.
Cash Flow from Operations was 397.795081967 + 683.936877076 + 1029.38983051 + 756.939130435 = Kr2,868 Mil.
|Accounts Receivable was Kr0 Mil.
Revenue was 890.273405137 + 812.0078125 + 747.545963229 + -1330.15283843 = Kr1,120 Mil.
Gross Profit was 406.652858326 + 398.4765625 + 389.592326139 + -309.941775837 = Kr885 Mil.
Total Current Assets was Kr1,801 Mil.
Total Assets was Kr7,052 Mil.
Property, Plant and Equipment(Net PPE) was Kr4,493 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr-73 Mil.
Selling, General & Admin. Expense(SGA) was Kr-138 Mil.
Total Current Liabilities was Kr1,323 Mil.
Long-Term Debt was Kr3,847 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)|
|=||(0 / 6144.76206815)||/||(0 / 1119.67434244)|
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)|
|=||(884.779971129 / 1119.67434244)||/||(3578.35720358 / 6144.76206815)|
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 - (2353.54918033 + 19258.7131148) / 23957.8606557)||/||(1 - (1800.51367026 + 4492.54349627) / 7051.81441591)|
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))|
|=||(-73.4565855395 / (-73.4565855395 + 4492.54349627))||/||(1109.74031038 / (1109.74031038 + 19258.7131148))|
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)|
|=||(281.461765757 / 6144.76206815)||/||(-137.964967473 / 1119.67434244)|
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)|
|=||((10889.1885246 + 1588.13934426) / 23957.8606557)||/||((3847.02568351 + 1323.07373654) / 7051.81441591)|
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|
|=||(1341.60960944 - -246.780162356||-||2868.06091999)||/||23957.8606557|
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 1.61 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
Frontline Ltd Annual Data
Frontline Ltd Quarterly Data