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

Warning Sign:

Beneish M-Score 2.09 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 1.61 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: 2.09

-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 -2.41.


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 * 1.357+0.404 * 0.9099+0.892 * 5.488+0.115 * -0.3051
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * -0.3717+4.679 * -0.0534-0.327 * 0.7104
=1.61

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was Kr0 Mil.
Revenue was 1288.17213115 + 1592.65780731 + 1924.60169492 + 1339.33043478 = Kr6,145 Mil.
Gross Profit was 608.901639344 + 908.920265781 + 1254.81355932 + 805.72173913 = Kr3,578 Mil.
Total Current Assets was Kr2,354 Mil.
Total Assets was Kr23,958 Mil.
Property, Plant and Equipment(Net PPE) was Kr19,259 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr1,110 Mil.
Selling, General & Admin. Expense(SGA) was Kr281 Mil.
Total Current Liabilities was Kr1,588 Mil.
Long-Term Debt was Kr10,889 Mil.
Net Income was 44.8442622951 + 118.870431894 + 668.694915254 + 509.2 = Kr1,342 Mil.
Non Operating Income was 4.02459016393 + -82.5996677741 + -83.8050847458 + -84.4 = Kr-247 Mil.
Cash Flow from Operations was 397.795081967 + 683.936877076 + 1029.38983051 + 756.939130435 = Kr2,868 Mil.
Accounts Receivable was Kr0 Mil.
Revenue was 890.273405137 + 812.0078125 + 747.545963229 + -1330.15283843 = Kr1,120 Mil.
Gross Profit was 406.652858326 + 398.4765625 + 389.592326139 + -309.941775837 = Kr885 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 Kr-73 Mil.
Selling, General & Admin. Expense(SGA) was Kr-138 Mil.
Total Current Liabilities was Kr1,323 Mil.
Long-Term Debt was Kr3,847 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 / 6144.76206815) / (0 / 1119.67434244)
=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)
=(884.779971129 / 1119.67434244) / (3578.35720358 / 6144.76206815)
=0.79021188 / 0.58234268
=1.357

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 - (2353.54918033 + 19258.7131148) / 23957.8606557) / (1 - (1800.51367026 + 4492.54349627) / 7051.81441591)
=0.09790517 / 0.10759745
=0.9099

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
=6144.76206815 / 1119.67434244
=5.488

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))
=(-73.4565855395 / (-73.4565855395 + 4492.54349627)) / (1109.74031038 / (1109.74031038 + 19258.7131148))
=-0.01662257 / 0.05448329
=-0.3051

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)
=(281.461765757 / 6144.76206815) / (-137.964967473 / 1119.67434244)
=0.04580515 / -0.12321883
=-0.3717

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)
=((10889.1885246 + 1588.13934426) / 23957.8606557) / ((3847.02568351 + 1323.07373654) / 7051.81441591)
=0.52080309 / 0.73315875
=0.7104

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
=(1341.60960944 - -246.780162356 - 2868.06091999) / 23957.8606557
=-0.0534

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 1.61 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 local exchange's 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

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 110.76221111.723510.36171
GMI 0.30810.32990.76060.94670.76220.72170.73390.84111.15341.357
AQI 1.26921.74554.93171.4481.0870.79130.23940.78291.4920.9099
SGI 0.34720.371.75330.98271.06740.99182.98484.97685.26745.488
DEPI 4.60472.73441.1781.44384.5483-1.99770.76450.42120.0886-0.3051
SGAI 0.63940.9290.0631-1.8522-2.0474-2.156215.3568-0.81-0.4611-0.3717
LVGI 1.04891.08470.29671.00540.60370.65691.75290.50760.8180.7104
TATA 0.0117-0.02480.02630.04980.11420.2188-0.0123-0.0112-0.0264-0.0534
M-score -2.80-3.03-0.03-1.57-0.91-1.38-3.291.251.101.61
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