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Frontline Ltd (OSTO:FROo)
Beneish M-Score
-3.58 (As of Today)

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 -3.37 suggests that the company is not a manipulator.

OSTO:FROO' s Beneish M-Score Range Over the Past 10 Years
Min: -4.19   Max: 23.67
Current: -3.58

-4.19
23.67

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.


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 * 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
=-3.37

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

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

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 / 2160.82843419) / (0 / 2599.65678645)
=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)
=(0 / 2599.65678645) / (554.656172328 / 2160.82843419)
=0.30842035 / 0.56233979
=0.5485

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 - (1800.51367026 + 4492.54349627) / 7051.81441591) / (1 - (1638.07496823 + 4060.08894536) / 6594.88564168)
=0.10759745 / 0.13597229
=0.7913

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
=2160.82843419 / 2599.65678645
=0.8312

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))
=0.12830526 / 0.06622522
=1.9374

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)
=0.08272034 / 0.07040461
=1.1749

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)
=0.73315875 / 1.11603559
=0.6569

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
=(393.175732819 - 142.473765809 - 1166.51539014) / 7051.81441591
=-0.1299

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.


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 own currency.

Frontline Ltd Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.6341.09510.63941.46231.25371.15420.72160.55811.4799
GMI 1.064900.89361.02541.34631.43781.22381.32040.6093
AQI 0.86531.7870.57070.50181.27041.33041.231.43211.3994
SGI 0.88980.80942.02090.4161.04460.69650.67990.97821.2838
DEPI 1.06990.77731.09350.89671.19470.49761.49280.96370.766
SGAI 1.01311.24482.53473.15290.26590.82281.30591.04311.1917
LVGI 1.03751.1970.93680.96911.00661.1021.04281.0440.9994
TATA -0.099-0.0293-0.0298-0.0599-0.044-0.3233-0.0921-0.1077-0.2273
M-score -3.40-3.04-2.50-3.42-1.97-3.82-3.25-3.09-2.95

Frontline Ltd Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 110.55411111.604111
GMI 1.88831.14351.14350.50630.46260.54850.54850.64490.60170.5485
AQI 1.34861.42821.43211.20031.26921.74551.39941.4481.0870.7913
SGI 0.81540.98510.98511.18171.19441.18451.18451.09990.80860.8312
DEPI 0.71080.63271.61971.49241.5881.19580.84941.02761.18641.9374
SGAI 0.7651.50781.50781.29181.46871.13621.13621.33861.12291.1749
LVGI 1.12511.13061.0441.07541.04891.08470.99941.00540.60370.6569
TATA -0.1147-0.114-0.103-0.1336-0.1319-0.1894-0.1885-0.1651-0.1615-0.1299
M-score -2.61-2.95-3.17-3.14-3.13-3.17-2.76-3.23-3.45-3.37
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