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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.
Frontline Ltd has a M-score of -4.04 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Frontline Ltd was 13.62. The lowest was -4.22. And the median was -2.44.
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 * 0.8114||+||0.528 * 0.7774||+||0.404 * 1.4321||+||0.892 * 1.0783||+||0.115 * 1.1544|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 7.9216||+||4.679 * -0.0703||-||0.327 * 1.044|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was Kr231 Mil.|
Revenue was 886.240740741 + 695.011904762 + 1017.24698795 + 727.76300578 = Kr3,326 Mil.
Gross Profit was 248.024691358 + 61.9880952381 + 427.855421687 + 143.947976879 = Kr882 Mil.
Total Current Assets was Kr1,606 Mil.
Total Assets was Kr8,442 Mil.
Property, Plant and Equipment(Net PPE) was Kr6,168 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr767 Mil.
Selling, General & Admin. Expense(SGA) was Kr325 Mil.
Total Current Liabilities was Kr807 Mil.
Long-Term Debt was Kr7,276 Mil.
Net Income was -80.4382716049 + -216.94047619 + -146.662650602 + -108.410404624 = Kr-552 Mil.
Non Operating Income was -72.8456790123 + 38.0119047619 + -8.90963855422 + 24.9884393064 = Kr-19 Mil.
Cash Flow from Operations was 38.462962963 + -18.5238095238 + 205.331325301 + -165.595375723 = Kr60 Mil.
|Accounts Receivable was Kr265 Mil.
Revenue was 848.783333333 + 643.422857143 + 734.678787879 + 857.775862069 = Kr3,085 Mil.
Gross Profit was 200.916666667 + 39.24 + 86.0545454545 + 309.511494253 = Kr636 Mil.
Total Current Assets was Kr2,178 Mil.
Total Assets was Kr9,379 Mil.
Property, Plant and Equipment(Net PPE) was Kr6,683 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr978 Mil.
Selling, General & Admin. Expense(SGA) was Kr38 Mil.
Total Current Liabilities was Kr1,037 Mil.
Long-Term Debt was Kr7,565 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)|
|=||(231.450617284 / 3326.26263923)||/||(264.538888889 / 3084.66084042)|
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)|
|=||(61.9880952381 / 3084.66084042)||/||(248.024691358 / 3326.26263923)|
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 - (1605.88271605 + 6168.39506173) / 8442.00617284)||/||(1 - (2177.94444444 + 6683.04444444) / 9379.00555556)|
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))|
|=||(978.08138976 / (978.08138976 + 6683.04444444))||/||(767.018778174 / (767.018778174 + 6168.39506173))|
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)|
|=||(324.587815187 / 3326.26263923)||/||(37.9986764194 / 3084.66084042)|
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)|
|=||((7276.48148148 + 807.234567901) / 8442.00617284)||/||((7565.45555556 + 1036.78333333) / 9379.00555556)|
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|
|=||(-552.451803022 - -18.7549734983||-||59.6751030178)||/||8442.00617284|
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 -4.04 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