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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 -2.61.
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 * 0.6644||+||0.404 * 1.448||+||0.892 * 1.1042||+||0.115 * 1.035|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3492||+||4.679 * -0.1249||-||0.327 * 1.0054|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was Kr0 Mil.|
Revenue was 1154.09272582 + 983.253275109 + 861.620076239 + 718.864048338 = Kr3,718 Mil.
Gross Profit was 660.463629097 + 382.459970888 + 261.118170267 + 143.516616314 = Kr1,448 Mil.
Total Current Assets was Kr1,608 Mil.
Total Assets was Kr7,641 Mil.
Property, Plant and Equipment(Net PPE) was Kr5,170 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr516 Mil.
Selling, General & Admin. Expense(SGA) was Kr288 Mil.
Total Current Liabilities was Kr1,952 Mil.
Long-Term Debt was Kr5,674 Mil.
Net Income was 248.792965627 + -94.4395924309 + -378.951715375 + -472.688821752 = Kr-697 Mil.
Non Operating Income was 51.2310151878 + -401.404657933 + -2.61753494282 + 47.7643504532 = Kr-305 Mil.
Cash Flow from Operations was 343.501199041 + 108.740902475 + 112.642947903 + -2.59214501511 = Kr562 Mil.
|Accounts Receivable was Kr0 Mil.
Revenue was 1019.17266187 + 880.803680982 + 754.737470167 + 712.23266745 = Kr3,367 Mil.
Gross Profit was 397.152278177 + 246.503067485 + 145.119331742 + 82.2326674501 = Kr871 Mil.
Total Current Assets was Kr1,983 Mil.
Total Assets was Kr8,238 Mil.
Property, Plant and Equipment(Net PPE) was Kr5,612 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr581 Mil.
Selling, General & Admin. Expense(SGA) was Kr194 Mil.
Total Current Liabilities was Kr1,042 Mil.
Long-Term Debt was Kr7,135 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 / 3717.83012551)||/||(0 / 3366.94648047)|
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)|
|=||(382.459970888 / 3366.94648047)||/||(660.463629097 / 3717.83012551)|
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 - (1607.60991207 + 5169.92805755) / 7640.89528377)||/||(1 - (1983.11151079 + 5611.93645084) / 8237.89568345)|
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))|
|=||(581.245598053 / (581.245598053 + 5611.93645084))||/||(515.526256589 / (515.526256589 + 5169.92805755))|
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)|
|=||(288.329055205 / 3717.83012551)||/||(193.540285787 / 3366.94648047)|
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)|
|=||((5673.66107114 + 1951.53477218) / 7640.89528377)||/||((7134.76618705 + 1041.69664269) / 8237.89568345)|
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|
|=||(-697.28716393 - -305.026827235||-||562.292904404)||/||7640.89528377|
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 -3.03 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