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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 -2.86.
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|
|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
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)|
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)|
|=||(261.78343949 / 3074.57775119)||/||(383.576642336 / 3588.93389427)|
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 - (1702.50364964 + 4543.34306569) / 7023.20437956)||/||(1 - (1596.03067485 + 6130.55214724) / 8390.21472393)|
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))|
|=||(591.773418014 / (591.773418014 + 6130.55214724))||/||(504.268093773 / (504.268093773 + 4543.34306569))|
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)|
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)|
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|
|=||(-1021.1190075 - -352.2797792||-||360.784239378)||/||7023.20437956|
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.
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