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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 Frontline Ltd was 23.67. The lowest was -4.23. And the median was -2.59.
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 * 0.6195||+||0.404 * 0.4255||+||0.892 * 1.4763||+||0.115 * 1.2025|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2993||+||4.679 * -0.0078||-||0.327 * 1.2454|
|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 + 983.253275109 + 861.620076239 + 718.864048338 = Kr3,311 Mil.
Gross Profit was 389.592326139 + 382.459970888 + 261.118170267 + 143.516616314 = Kr1,177 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 Kr439 Mil.
Selling, General & Admin. Expense(SGA) was Kr219 Mil.
Total Current Liabilities was Kr1,450 Mil.
Long-Term Debt was Kr4,610 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 / 4888.2882185)||/||(0 / 3311.28336292)|
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)|
|=||(1176.68708361 / 3311.28336292)||/||(2803.88698708 / 4888.2882185)|
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 - (3779.25423729 + 19237.220339) / 25250.1101695)||/||(1 - (1682.9656275 + 10117.1382894) / 14897.6179057)|
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))|
|=||(439.192880893 / (439.192880893 + 10117.1382894))||/||(689.449056212 / (689.449056212 + 19237.220339))|
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)||/||(218.776697092 / 3311.28336292)|
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)|
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|
|=||(1877.03311723 - -207.564508037||-||2281.59029305)||/||25250.1101695|
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 -2.63 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