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Frontline Ltd (OSTO:FROO)
Beneish M-Score
-3.05 (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 -3.02 suggests that the company is not a manipulator.

OSTO:FROO' s 10-Year Beneish M-Score Range
Min: -6.1   Max: 13.62
Current: -3.05

-6.1
13.62

During the past 13 years, the highest Beneish M-Score of Frontline Ltd was 13.62. The lowest was -6.10. And the median was -2.69.


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 * 0.8456+0.404 * 1.2003+0.892 * 0.9907+0.115 * 1.5844
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.6999+4.679 * -0.1008-0.327 * 1.0192
=-3.02

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was Kr262 Mil.
Revenue was 1017.95209581 + 886.240740741 + 695.011904762 + 1017.24698795 = Kr3,616 Mil.
Gross Profit was 396.676646707 + 248.024691358 + 61.9880952381 + 427.855421687 = Kr1,135 Mil.
Total Current Assets was Kr1,981 Mil.
Total Assets was Kr8,228 Mil.
Property, Plant and Equipment(Net PPE) was Kr5,605 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr326 Mil.
Selling, General & Admin. Expense(SGA) was Kr330 Mil.
Total Current Liabilities was Kr1,040 Mil.
Long-Term Debt was Kr6,699 Mil.
Net Income was -72.3652694611 + -80.4382716049 + -216.94047619 + -146.662650602 = Kr-516 Mil.
Non Operating Income was 5.0119760479 + -72.8456790123 + 38.0119047619 + -8.90963855422 = Kr-39 Mil.
Cash Flow from Operations was 126.658682635 + 38.462962963 + -18.5238095238 + 205.331325301 = Kr352 Mil.
Accounts Receivable was Kr0 Mil.
Revenue was 727.76300578 + 1096.86666667 + 724.622857143 + 1101.27878788 = Kr3,651 Mil.
Gross Profit was 143.947976879 + 362.844444444 + 42.1485714286 + 419.424242424 = Kr968 Mil.
Total Current Assets was Kr1,771 Mil.
Total Assets was Kr9,154 Mil.
Property, Plant and Equipment(Net PPE) was Kr6,788 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr648 Mil.
Selling, General & Admin. Expense(SGA) was Kr196 Mil.
Total Current Liabilities was Kr719 Mil.
Long-Term Debt was Kr7,730 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)
=(262.173652695 / 3616.45172926) / (0 / 3650.53131747)
=0.07249472 / 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)
=(248.024691358 / 3650.53131747) / (396.676646707 / 3616.45172926)
=0.26526693 / 0.31371768
=0.8456

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 - (1980.73652695 + 5605.21556886) / 8228.02994012) / (1 - (1771.19653179 + 6787.79190751) / 9154.13294798)
=0.07803543 / 0.06501375
=1.2003

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
=3616.45172926 / 3650.53131747
=0.9907

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))
=(648.136340448 / (648.136340448 + 6787.79190751)) / (326.304477168 / (326.304477168 + 5605.21556886))
=0.0871628 / 0.05501195
=1.5844

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)
=(330.165088386 / 3616.45172926) / (196.052040554 / 3650.53131747)
=0.09129531 / 0.05370507
=1.6999

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)
=((6699.4011976 + 1040.4491018) / 8228.02994012) / ((7730.31213873 + 718.699421965) / 9154.13294798)
=0.94066871 / 0.92297235
=1.0192

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
=(-516.406667859 - -38.7314367568 - 351.929161375) / 8228.02994012
=-0.1008

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.


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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.45070.73331.04751.2330.50132.78310.61131.43070.7381.0172
GMI 0.77781.06321.10411.13830.98330.86871.04211.9671.19041.2818
AQI 0.60210.72741.57870.029234.93440.50181.27041.33041.231.4321
SGI 1.45250.86441.00630.69652.220.41871.07110.67150.79020.8601
DEPI 0.82041.01140.97190.781.08980.89671.19470.49761.49280.959
SGAI 0.91061.00811.45361.37710.55993.57272.93960.27981.10121.205
LVGI 0.99681.04090.99121.1970.93680.96911.00661.1021.04281.044
TATA 0.0242-0.0967-0.0711-0.0293-0.0253-0.0591-0.0392-0.3347-0.0921-0.1077
M-score -1.83-3.39-2.55-3.1511.84-2.35-3.14-3.27-3.12-2.82

Frontline Ltd Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.5851110.65211111.02171
GMI 1.92031.91731.41131.29181.00511.08631.15371.02581.17560.8456
AQI 1.33041.30791.50891.45921.231.440811.22641.42821.43211.2003
SGI 0.60610.62920.76110.79120.89430.90460.89080.94420.85640.9907
DEPI 0.53340.60.6560.69461.371.37770.41041.38111.25981.5844
SGAI 0.34410.15860.22750.51461.13162.26834.02511.94661.94041.6999
LVGI 1.1021.11281.12341.10171.04281.05511.12511.13061.0441.0192
TATA -0.3318-0.3618-0.3387-0.306-0.0962-0.0875-0.0903-0.0917-0.0703-0.1008
M-score -3.20-3.83-3.80-3.74-3.24-2.940.58-2.93-2.80-3.02
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