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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 -2.63.
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 * 0.5834||+||0.404 * 1.087||+||0.892 * 1.2011||+||0.115 * 0.9002|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 2.2537||+||4.679 * -0.0927||-||0.327 * 0.6037|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was Kr229 Mil.|
Revenue was 1052.9453125 + 1154.09272582 + 983.253275109 + 861.620076239 = Kr4,052 Mil.
Gross Profit was 615.34375 + 660.463629097 + 382.459970888 + 261.118170267 = Kr1,919 Mil.
Total Current Assets was Kr1,754 Mil.
Total Assets was Kr6,817 Mil.
Property, Plant and Equipment(Net PPE) was Kr4,393 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr513 Mil.
Selling, General & Admin. Expense(SGA) was Kr576 Mil.
Total Current Liabilities was Kr1,347 Mil.
Long-Term Debt was Kr2,961 Mil.
Net Income was 135.703125 + 248.792965627 + -94.4395924309 + -378.951715375 = Kr-89 Mil.
Non Operating Income was -25.984375 + 51.2310151878 + -401.404657933 + -2.61753494282 = Kr-379 Mil.
Cash Flow from Operations was 357.015625 + 343.501199041 + 108.740902475 + 112.642947903 = Kr922 Mil.
|Accounts Receivable was Kr0 Mil.
Revenue was 718.864048338 + 1019.17266187 + 880.803680982 + 754.737470167 = Kr3,374 Mil.
Gross Profit was 143.516616314 + 397.152278177 + 246.503067485 + 145.119331742 = Kr932 Mil.
Total Current Assets was Kr1,450 Mil.
Total Assets was Kr7,564 Mil.
Property, Plant and Equipment(Net PPE) was Kr5,430 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr564 Mil.
Selling, General & Admin. Expense(SGA) was Kr213 Mil.
Total Current Liabilities was Kr1,953 Mil.
Long-Term Debt was Kr5,965 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)|
|=||(228.7265625 / 4051.91138967)||/||(0 / 3373.57786136)|
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)|
|=||(660.463629097 / 3373.57786136)||/||(615.34375 / 4051.91138967)|
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 - (1754.4140625 + 4393.234375) / 6817.078125)||/||(1 - (1450.38670695 + 5430.07250755) / 7563.75830816)|
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))|
|=||(564.055883446 / (564.055883446 + 5430.07250755))||/||(512.869794165 / (512.869794165 + 4393.234375))|
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)|
|=||(576.245265553 / 4051.91138967)||/||(212.88334762 / 3373.57786136)|
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)|
|=||((2961.03125 + 1346.5625) / 6817.078125)||/||((5964.95468278 + 1952.50755287) / 7563.75830816)|
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|
|=||(-88.8952171782 - -378.775552688||-||921.900674419)||/||6817.078125|
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 -3.02 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