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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 -3.79. And the median was -2.41.
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 * 1.7553||+||0.528 * 0.7412||+||0.404 * 0.2394||+||0.892 * 2.9306||+||0.115 * 0.818|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 59.9649||+||4.679 * -0.0087||-||0.327 * 1.7529|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was Kr499 Mil.|
Revenue was 506.669565217 + 1006.73570837 + 1052.9453125 + 1154.09272582 = Kr3,720 Mil.
Gross Profit was 114.339130435 + 554.656172328 + 615.34375 + 660.463629097 = Kr1,945 Mil.
Total Current Assets was Kr4,065 Mil.
Total Assets was Kr25,101 Mil.
Property, Plant and Equipment(Net PPE) was Kr18,693 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr424 Mil.
Selling, General & Admin. Expense(SGA) was Kr340 Mil.
Total Current Liabilities was Kr2,105 Mil.
Long-Term Debt was Kr10,395 Mil.
Net Income was 771.330434783 + 144.382767191 + 135.703125 + 248.792965627 = Kr1,300 Mil.
Non Operating Income was -245.252173913 + 91.2427506214 + -25.984375 + 51.2310151878 = Kr-129 Mil.
Cash Flow from Operations was 590.052173913 + 357.257663629 + 357.015625 + 343.501199041 = Kr1,648 Mil.
|Accounts Receivable was Kr97 Mil.
Revenue was -1330.15283843 + 861.620076239 + 718.864048338 + 1019.17266187 = Kr1,270 Mil.
Gross Profit was -309.941775837 + 261.118170267 + 143.516616314 + 397.152278177 = Kr492 Mil.
Total Current Assets was Kr3,180 Mil.
Total Assets was Kr18,208 Mil.
Property, Plant and Equipment(Net PPE) was Kr7,926 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr146 Mil.
Selling, General & Admin. Expense(SGA) was Kr2 Mil.
Total Current Liabilities was Kr1,726 Mil.
Long-Term Debt was Kr3,446 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)|
|=||(498.843478261 / 3720.4433119)||/||(96.9723435226 / 1269.50394802)|
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)|
|=||(554.656172328 / 1269.50394802)||/||(114.339130435 / 3720.4433119)|
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 - (4064.91304348 + 18692.6695652) / 25101.3391304)||/||(1 - (3179.82532751 + 7925.53857351) / 18207.9184862)|
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))|
|=||(146.343178123 / (146.343178123 + 7925.53857351))||/||(423.688656882 / (423.688656882 + 18692.6695652))|
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)|
|=||(340.241342558 / 3720.4433119)||/||(1.93610842725 / 1269.50394802)|
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)|
|=||((10395.0782609 + 2104.66956522) / 25101.3391304)||/||((3446.31004367 + 1726.39737991) / 18207.9184862)|
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|
|=||(1300.2092926 - -128.762783104||-||1647.82666158)||/||25101.3391304|
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 -10.96 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