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Frontline Ltd (OSTO:FROo)
Beneish M-Score
-2.90 (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 -2.53 suggests that the company is not a manipulator.

OSTO:FROO' s 10-Year Beneish M-Score Range
Min: -3.79   Max: 23.67
Current: -2.9

-3.79
23.67

During the past 13 years, the highest Beneish M-Score of Frontline Ltd was 23.67. The lowest was -3.79. And the median was -2.86.


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 * 1.6324+0.528 * 0.6078+0.404 * 1.3994+0.892 * 1.1673+0.115 * 0.8812
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.201+4.679 * -0.1466-0.327 * 0.9994
=-2.53

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was Kr138 Mil.
Revenue was 986.124087591 + 863.815286624 + 721.042424242 + 1017.95209581 = Kr3,589 Mil.
Gross Profit was 383.576642336 + 261.78343949 + 143.951515152 + 396.676646707 = Kr1,186 Mil.
Total Current Assets was Kr1,703 Mil.
Total Assets was Kr7,023 Mil.
Property, Plant and Equipment(Net PPE) was Kr4,543 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr504 Mil.
Selling, General & Admin. Expense(SGA) was Kr263 Mil.
Total Current Liabilities was Kr2,398 Mil.
Long-Term Debt was Kr4,323 Mil.
Net Income was -94.7153284672 + -379.917197452 + -474.121212121 + -72.3652694611 = Kr-1,021 Mil.
Non Operating Income was -402.576642336 + -2.62420382166 + 47.9090909091 + 5.0119760479 = Kr-352 Mil.
Cash Flow from Operations was 123.795620438 + 112.929936306 + -2.6 + 126.658682635 = Kr361 Mil.
Accounts Receivable was Kr73 Mil.
Revenue was 880.803680982 + 752.94047619 + 713.070588235 + 727.76300578 = Kr3,075 Mil.
Gross Profit was 246.503067485 + 144.773809524 + 82.3294117647 + 143.947976879 = Kr618 Mil.
Total Current Assets was Kr1,596 Mil.
Total Assets was Kr8,390 Mil.
Property, Plant and Equipment(Net PPE) was Kr6,131 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr592 Mil.
Selling, General & Admin. Expense(SGA) was Kr188 Mil.
Total Current Liabilities was Kr802 Mil.
Long-Term Debt was Kr7,232 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)
=(138.270072993 / 3588.93389427) / (72.5644171779 / 3074.57775119)
=0.03852678 / 0.02360143
=1.6324

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)
=(261.78343949 / 3074.57775119) / (383.576642336 / 3588.93389427)
=0.20085824 / 0.33045698
=0.6078

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 - (1702.50364964 + 4543.34306569) / 7023.20437956) / (1 - (1596.03067485 + 6130.55214724) / 8390.21472393)
=0.11068419 / 0.07909594
=1.3994

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
=3588.93389427 / 3074.57775119
=1.1673

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))
=(591.773418014 / (591.773418014 + 6130.55214724)) / (504.268093773 / (504.268093773 + 4543.34306569))
=0.08803106 / 0.09990233
=0.8812

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)
=(263.335163201 / 3588.93389427) / (187.84322745 / 3074.57775119)
=0.0733742 / 0.06109562
=1.201

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)
=((4322.56934307 + 2398.45255474) / 7023.20437956) / ((7231.8404908 + 802.282208589) / 8390.21472393)
=0.9569737 / 0.95755865
=0.9994

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
=(-1021.1190075 - -352.2797792 - 360.784239378) / 7023.20437956
=-0.1466

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 -2.53 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 0.8880.812.0160.41811.04340.69530.68180.97651.2875
DEPI 1.06990.77731.09350.89671.19470.49761.49280.96370.7847
SGAI 1.01311.24482.53473.15290.26590.82281.30591.04311.1917
LVGI 1.03751.1970.93680.96911.00661.1021.04281.0440.9994
TATA -0.099-0.0293-0.0298-0.0599-0.044-0.3233-0.0921-0.1077-0.1783
M-score -3.41-3.04-2.51-3.41-1.98-3.82-3.25-3.09-2.72

Frontline Ltd Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 10.72511110.54741111.6324
GMI 1.3491.57211.9491.68021.26751.02310.61440.5760.62480.6078
AQI 1.45921.231.44081.34861.42821.43211.20031.26921.74551.3994
SGI 0.70050.67860.72410.81150.92470.99551.13541.14471.14141.1673
DEPI 0.74110.88180.85520.70940.63111.61981.49311.60311.20770.8812
SGAI 1.33290.96770.95880.86241.35551.31491.17741.29481.09761.201
LVGI 1.10171.04281.05511.12511.13061.0441.07540.99291.08470.9994
TATA -0.3127-0.1263-0.1198-0.1252-0.1252-0.1039-0.1347-0.1326-0.1905-0.1466
M-score -3.96-3.24-2.64-2.78-2.97-3.20-3.11-3.07-3.16-2.53
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