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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 -4.41. And the median was -2.61.
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 * 0.6645||+||0.404 * 1.448||+||0.892 * 1.1074||+||0.115 * 1.0343|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3492||+||4.679 * -0.1251||-||0.327 * 1.0054|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was Kr0 Mil.|
Revenue was 1155.016 + 986.124087591 + 863.815286624 + 721.042424242 = Kr3,726 Mil.
Gross Profit was 660.992 + 383.576642336 + 261.78343949 + 143.951515152 = Kr1,450 Mil.
Total Current Assets was Kr1,609 Mil.
Total Assets was Kr7,647 Mil.
Property, Plant and Equipment(Net PPE) was Kr5,174 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr517 Mil.
Selling, General & Admin. Expense(SGA) was Kr289 Mil.
Total Current Liabilities was Kr1,953 Mil.
Long-Term Debt was Kr5,678 Mil.
Net Income was 248.992 + -94.7153284672 + -379.917197452 + -474.121212121 = Kr-700 Mil.
Non Operating Income was 51.272 + -402.576642336 + -2.62420382166 + 47.9090909091 = Kr-306 Mil.
Cash Flow from Operations was 343.776 + 109.058394161 + 112.929936306 + -2.6 = Kr563 Mil.
|Accounts Receivable was Kr0 Mil.
Revenue was 1017.95209581 + 880.803680982 + 752.94047619 + 713.070588235 = Kr3,365 Mil.
Gross Profit was 396.676646707 + 246.503067485 + 144.773809524 + 82.3294117647 = Kr870 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 Kr581 Mil.
Selling, General & Admin. Expense(SGA) was Kr193 Mil.
Total Current Liabilities was Kr1,040 Mil.
Long-Term Debt was Kr7,126 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 / 3725.99779846)||/||(0 / 3364.76684122)|
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)|
|=||(383.576642336 / 3364.76684122)||/||(660.992 / 3725.99779846)|
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 - (1608.896 + 5174.064) / 7647.008)||/||(1 - (1980.73652695 + 5605.21556886) / 8228.02994012)|
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))|
|=||(580.911523306 / (580.911523306 + 5605.21556886))||/||(516.689211129 / (516.689211129 + 5174.064))|
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)|
|=||(288.983785956 / 3725.99779846)||/||(193.420500649 / 3364.76684122)|
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)|
|=||((5678.2 + 1953.096) / 7647.008)||/||((7126.22155689 + 1040.4491018) / 8228.02994012)|
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|
|=||(-699.761738041 - -306.019755248||-||563.164330466)||/||7647.008|
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 -3.02 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