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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 -2.57.
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 * 0.7595||+||0.404 * 1.7455||+||0.892 * 1.1414||+||0.115 * 1.1826|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0976||+||4.679 * -0.1905||-||0.327 * 1.0847|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was Kr0 Mil.|
Revenue was 863.815286624 + 721.042424242 + 1017.95209581 + 880.803680982 = Kr3,484 Mil.
Gross Profit was 213.197452229 + 143.951515152 + 396.676646707 + 188.404907975 = Kr942 Mil.
Total Current Assets was Kr1,642 Mil.
Total Assets was Kr6,612 Mil.
Property, Plant and Equipment(Net PPE) was Kr4,070 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr609 Mil.
Selling, General & Admin. Expense(SGA) was Kr235 Mil.
Total Current Liabilities was Kr2,066 Mil.
Long-Term Debt was Kr5,313 Mil.
Net Income was -379.917197452 + -474.121212121 + -72.3652694611 + -79.9447852761 = Kr-1,006 Mil.
Non Operating Income was -2.62420382166 + 47.9090909091 + 5.0119760479 + -72.3987730061 = Kr-22 Mil.
Cash Flow from Operations was 112.929936306 + -2.6 + 126.658682635 + 38.226993865 = Kr275 Mil.
|Accounts Receivable was Kr0 Mil.
Revenue was 752.94047619 + 713.070588235 + 727.76300578 + 858.320224719 = Kr3,052 Mil.
Gross Profit was 197.535714286 + 82.3294117647 + 143.947976879 + 203.174157303 = Kr627 Mil.
Total Current Assets was Kr1,653 Mil.
Total Assets was Kr8,388 Mil.
Property, Plant and Equipment(Net PPE) was Kr6,082 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr1,106 Mil.
Selling, General & Admin. Expense(SGA) was Kr188 Mil.
Total Current Liabilities was Kr803 Mil.
Long-Term Debt was Kr7,828 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 / 3483.61348766)||/||(0 / 3052.09429493)|
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)|
|=||(143.951515152 / 3052.09429493)||/||(213.197452229 / 3483.61348766)|
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 - (1642.24840764 + 4070.43312102) / 6611.68789809)||/||(1 - (1652.55357143 + 6081.79166667) / 8387.75595238)|
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))|
|=||(1105.78748019 / (1105.78748019 + 6081.79166667))||/||(608.708512921 / (608.708512921 + 4070.43312102))|
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)|
|=||(235.222405152 / 3483.61348766)||/||(187.761611679 / 3052.09429493)|
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)|
|=||((5312.86624204 + 2066.01273885) / 6611.68789809)||/||((7827.57142857 + 802.892857143) / 8387.75595238)|
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|
|=||(-1006.34846431 - -22.1019098708||-||275.215612805)||/||6611.68789809|
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 -3.09 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