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Frontline Ltd (OSTO:FROo)
Beneish M-Score
0.36 (As of Today)

Warning Sign:

Beneish M-Score 0.36 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.

Frontline Ltd has a M-score of 1.00 signals that the company is a manipulator.

OSTO:FROO' s Beneish M-Score Range Over the Past 10 Years
Min: -4.35   Max: 23.67
Current: 0.36

-4.35
23.67

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 -2.47.


Definition

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 * 0.8461+0.404 * 0.4255+0.892 * 4.8987+0.115 * 0.2212
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * -2.0348+4.679 * -0.0078-0.327 * 1.2454
=1.00

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was Kr0 Mil.
Revenue was 1924.60169492 + 506.669565217 + 1006.73570837 + 1450.28125 = Kr4,888 Mil.
Gross Profit was 1254.81355932 + 114.339130435 + 554.656172328 + 880.078125 = Kr2,804 Mil.
Total Current Assets was Kr3,779 Mil.
Total Assets was Kr25,250 Mil.
Property, Plant and Equipment(Net PPE) was Kr19,237 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr689 Mil.
Selling, General & Admin. Expense(SGA) was Kr420 Mil.
Total Current Liabilities was Kr1,920 Mil.
Long-Term Debt was Kr10,872 Mil.
Net Income was 668.694915254 + 771.330434783 + 144.382767191 + 292.625 = Kr1,877 Mil.
Non Operating Income was -83.8050847458 + -245.252173913 + 91.2427506214 + 30.25 = Kr-208 Mil.
Cash Flow from Operations was 1029.38983051 + 590.052173913 + 357.257663629 + 304.890625 = Kr2,282 Mil.
Accounts Receivable was Kr0 Mil.
Revenue was 747.545963229 + -1330.15283843 + 861.620076239 + 718.864048338 = Kr998 Mil.
Gross Profit was 389.592326139 + -309.941775837 + 261.118170267 + 143.516616314 = Kr484 Mil.
Total Current Assets was Kr1,683 Mil.
Total Assets was Kr14,898 Mil.
Property, Plant and Equipment(Net PPE) was Kr10,117 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr78 Mil.
Selling, General & Admin. Expense(SGA) was Kr-42 Mil.
Total Current Liabilities was Kr1,450 Mil.
Long-Term Debt was Kr4,610 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(0 / 4888.2882185) / (0 / 997.877249379)
=0 / 0
=1

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(484.285336883 / 997.877249379) / (2803.88698708 / 4888.2882185)
=0.48531554 / 0.57359281
=0.8461

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (3779.25423729 + 19237.220339) / 25250.1101695) / (1 - (1682.9656275 + 10117.1382894) / 14897.6179057)
=0.08846043 / 0.20792009
=0.4255

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=4888.2882185 / 997.877249379
=4.8987

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))
=(78.0138415921 / (78.0138415921 + 10117.1382894)) / (689.449056212 / (689.449056212 + 19237.220339))
=0.00765205 / 0.03459931
=0.2212

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)
=(419.618432094 / 4888.2882185) / (-42.0966653537 / 997.877249379)
=0.08584159 / -0.04218622
=-2.0348

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)
=((10872.0423729 + 1919.53389831) / 25250.1101695) / ((4610.34372502 + 1449.6882494) / 14897.6179057)
=0.50659487 / 0.40677859
=1.2454

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(1877.03311723 - -207.564508037 - 2281.59029305) / 25250.1101695
=-0.0078

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 1.00 signals that the company is likely to be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Frontline Ltd Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.78851.09510.63941.48871.20961.31570.64452.15550.62372.2687
GMI 1.08151.07850.89361.37390.98471.65471.08510.94310.76470.6956
AQI 3.68521.7870.57070.50181.27041.33041.231.43214.93170.2394
SGI 0.9580.80942.02090.40861.08260.6110.76130.25322.14252.2674
DEPI 0.96750.77731.09350.89671.19470.49761.49923.55070.86391.1486
SGAI 1.46591.24486.35210.34970.93970.92551.18190.49060.71071.1281
LVGI 1.00131.1970.93680.96911.00661.1021.04281.0440.29671.7529
TATA -0.0711-0.0293-0.0302-0.0645-0.0385-0.3233-0.09210.02260.0267-0.0134
M-score -2.00-2.47-3.16-2.75-2.26-3.65-3.30-1.470.05-0.96

Frontline Ltd Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 2.32571110.76221111.75971
GMI 0.69730.34580.30810.32990.76060.94670.73150.70590.74170.8461
AQI 1.43211.20031.26921.74554.93172.66441.0870.79130.23940.4255
SGI 0.23470.3430.34720.371.75330.98271.69191.66032.92344.8987
DEPI 3.97733.83914.60472.73441.1782.80490.64592.0430.78880.2212
SGAI 0.38990.35060.63940.9290.0631-1.85224.36693.233659.8353-2.0348
LVGI 1.0441.07541.04891.08470.29670.40980.60370.65691.75291.2454
TATA 0.0264-0.00180.0117-0.02480.02630.02550.12550.1475-0.0089-0.0078
M-score -1.37-2.93-2.80-3.03-0.03-0.84-1.87-1.59-10.941.00
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