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Frontline Ltd (OSTO:FROO)
Beneish M-Score
-4.22 (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 -4.04 suggests that the company is not a manipulator.

OSTO:FROO' s 10-Year Beneish M-Score Range
Min: -4.22   Max: 13.62
Current: -4.22

-4.22
13.62

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.


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 * 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
=-4.04

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

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

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)
=(231.450617284 / 3326.26263923) / (264.538888889 / 3084.66084042)
=0.06958278 / 0.08575947
=0.8114

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)
=(61.9880952381 / 3084.66084042) / (248.024691358 / 3326.26263923)
=0.20609161 / 0.2651072
=0.7774

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 - (1605.88271605 + 6168.39506173) / 8442.00617284) / (1 - (2177.94444444 + 6683.04444444) / 9379.00555556)
=0.07909594 / 0.05523151
=1.4321

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
=3326.26263923 / 3084.66084042
=1.0783

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))
=0.1276681 / 0.11059452
=1.1544

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)
=0.09758334 / 0.01231859
=7.9216

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)
=0.95755865 / 0.91718027
=1.044

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
=(-552.451803022 - -18.7549734983 - 59.6751030178) / 8442.00617284
=-0.0703

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.


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 1.44120.73671.1120.54682.78310.63891.33350.87520.8806
GMI 0.77581.064900.89361.02541.34631.43781.22381.3204
AQI 0.36820.86531.7870.57070.50181.27041.33041.231.4321
SGI 1.46030.86010.77232.0350.41871.02490.72040.66630.9936
DEPI 0.79351.06990.77731.09350.89671.19470.49761.49280.959
SGAI 0.76691.01311.24482.53473.15290.26590.82281.30591.0431
LVGI 0.99741.03751.1970.93680.96911.00661.1021.04281.044
TATA 0.0645-0.099-0.0293-0.0298-0.0599-0.044-0.3233-0.0921-0.1077
M-score -1.72-3.34-3.06-2.58-2.20-2.56-3.63-3.12-2.78

Frontline Ltd Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 11.48791110.84471110.8114
GMI 1.76351.62541.46061.3581.29991.51571.87621.06790.94330.7774
AQI 1.64941.33041.307916.73161.45921.231.44081.01241.42821.4321
SGI 0.63490.64570.65160.72120.72360.69040.72830.88490.99091.0783
DEPI 0.95310.53340.60.21410.72150.97250.9690.94640.81731.1544
SGAI 0.3250.68531.8412.76591.30620.25260.25441.06211.07547.9216
LVGI 1.03851.1021.11281.12341.10171.04281.05511.12511.13061.044
TATA -0.1001-0.3159-0.3451-0.3497-0.3173-0.1277-0.1197-0.0903-0.0917-0.0703
M-score -2.51-3.39-4.271.75-3.99-3.02-2.54-3.02-2.85-4.04
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