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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 -4.19. And the median was -2.73.
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 * 0.5485||+||0.404 * 0.7913||+||0.892 * 0.8312||+||0.115 * 1.9374|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1749||+||4.679 * -0.1299||-||0.327 * 0.6569|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was Kr0 Mil.|
Revenue was 1006.73570837 + 0 + 1154.09272582 + 0 = Kr2,161 Mil.
Gross Profit was 554.656172328 + 0 + 660.463629097 + 0 = Kr1,215 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 Kr319 Mil.
Selling, General & Admin. Expense(SGA) was Kr179 Mil.
Total Current Liabilities was Kr1,323 Mil.
Long-Term Debt was Kr3,847 Mil.
Net Income was 144.382767191 + 0 + 248.792965627 + 0 = Kr393 Mil.
Non Operating Income was 91.2427506214 + 0 + 51.2310151878 + 0 = Kr142 Mil.
Cash Flow from Operations was 357.257663629 + 357.015625 + 343.501199041 + 108.740902475 = Kr1,167 Mil.
|Accounts Receivable was Kr0 Mil.
Revenue was 861.620076239 + 718.864048338 + 1019.17266187 + 0 = Kr2,600 Mil.
Gross Profit was 261.118170267 + 143.516616314 + 397.152278177 + 0 = Kr802 Mil.
Total Current Assets was Kr1,638 Mil.
Total Assets was Kr6,595 Mil.
Property, Plant and Equipment(Net PPE) was Kr4,060 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr598 Mil.
Selling, General & Admin. Expense(SGA) was Kr183 Mil.
Total Current Liabilities was Kr2,061 Mil.
Long-Term Debt was Kr5,299 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 / 2160.82843419)||/||(0 / 2599.65678645)|
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)|
|=||(0 / 2599.65678645)||/||(554.656172328 / 2160.82843419)|
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 - (1800.51367026 + 4492.54349627) / 7051.81441591)||/||(1 - (1638.07496823 + 4060.08894536) / 6594.88564168)|
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))|
|=||(597.606874643 / (597.606874643 + 4060.08894536))||/||(318.620404972 / (318.620404972 + 4492.54349627))|
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)|
|=||(178.744467558 / 2160.82843419)||/||(183.027811484 / 2599.65678645)|
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)|
|=||((3847.02568351 + 1323.07373654) / 7051.81441591)||/||((5299.36467598 + 2060.76238882) / 6594.88564168)|
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|
|=||(393.175732819 - 142.473765809||-||1166.51539014)||/||7051.81441591|
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 -3.37 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