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Frontline Ltd (OSTO:FROO)
Beneish M-Score
-3.86 (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 -3.71 suggests that the company is not a manipulator.

OSTO:FROO' s 10-Year Beneish M-Score Range
Min: -4.24   Max: 23.67
Current: -3.86

-4.24
23.67

During the past 13 years, the highest Beneish M-Score of Frontline Ltd was 23.67. The lowest was -4.24. And the median was -2.50.


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 * 0.5755+0.404 * 1.2692+0.892 * 1.1511+0.115 * 1.0987
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 4.8012+4.679 * -0.131-0.327 * 0.9929
=-3.71

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was Kr135 Mil.
Revenue was 738.956521739 + 1017.95209581 + 886.240740741 + 752.94047619 = Kr3,396 Mil.
Gross Profit was 147.527950311 + 396.676646707 + 248.024691358 + 144.773809524 = Kr937 Mil.
Total Current Assets was Kr1,491 Mil.
Total Assets was Kr7,775 Mil.
Property, Plant and Equipment(Net PPE) was Kr5,582 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr631 Mil.
Selling, General & Admin. Expense(SGA) was Kr217 Mil.
Total Current Liabilities was Kr2,007 Mil.
Long-Term Debt was Kr5,697 Mil.
Net Income was -485.900621118 + -72.3652694611 + -80.4382716049 + -216.94047619 = Kr-856 Mil.
Non Operating Income was 49.099378882 + 5.0119760479 + -72.8456790123 + 38.0119047619 = Kr19 Mil.
Cash Flow from Operations was -2.66459627329 + 126.658682635 + 38.462962963 + -18.5238095238 = Kr144 Mil.
Accounts Receivable was Kr0 Mil.
Revenue was 730.253012048 + 727.76300578 + 848.783333333 + 643.422857143 = Kr2,950 Mil.
Gross Profit was 84.313253012 + 143.947976879 + 200.916666667 + 39.24 = Kr468 Mil.
Total Current Assets was Kr1,784 Mil.
Total Assets was Kr8,845 Mil.
Property, Plant and Equipment(Net PPE) was Kr6,431 Mil.
Depreciation, Depletion and Amortization(DDA) was Kr807 Mil.
Selling, General & Admin. Expense(SGA) was Kr39 Mil.
Total Current Liabilities was Kr785 Mil.
Long-Term Debt was Kr8,042 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)
=(134.633540373 / 3396.08983448) / (0 / 2950.2222083)
=0.03964369 / 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)
=(396.676646707 / 2950.2222083) / (147.527950311 / 3396.08983448)
=0.15877377 / 0.27590645
=0.5755

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 - (1490.92546584 + 5581.8447205) / 7775.16770186) / (1 - (1784.45783133 + 6430.53614458) / 8844.51204819)
=0.09033857 / 0.07117612
=1.2692

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
=3396.08983448 / 2950.2222083
=1.1511

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))
=(807.361967871 / (807.361967871 + 6430.53614458)) / (630.765432099 / (630.765432099 + 5581.8447205))
=0.11154647 / 0.10152986
=1.0987

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)
=(216.864613194 / 3396.08983448) / (39.2383878481 / 2950.2222083)
=0.06385715 / 0.01330015
=4.8012

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)
=((5697.19875776 + 2007.08074534) / 7775.16770186) / ((8041.94578313 + 784.825301205) / 8844.51204819)
=0.99088274 / 0.99799413
=0.9929

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
=(-855.644638375 - 19.2775806795 - 143.933239801) / 7775.16770186
=-0.131

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 -3.71 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 1.84570.6341.09510.63941.46231.25371.15420.72160.5581
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 0.79351.06990.77731.09350.89671.19470.49761.49280.9435
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 -1.35-3.43-3.07-2.49-3.41-1.99-3.80-3.26-3.08

Frontline Ltd Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1110.69651110.552211
GMI 1.46061.3581.29991.51571.87621.6871.27631.02780.61690.5755
AQI 1.307916.73161.45921.231.44080.12161.42821.43211.20031.2692
SGI 0.65160.72120.72360.69040.72830.80650.92191.00411.14651.1511
DEPI 0.60.21410.72150.97251.12842.95730.99741.12060.85851.0987
SGAI 1.8412.79061.32220.26480.26640.23390.19234.78194.21544.8012
LVGI 1.11281.12341.10171.04281.05511.12511.13061.0441.01920.9929
TATA -0.3451-0.3497-0.3173-0.1277-0.1197-0.1235-0.1267-0.1051-0.1365-0.131
M-score -4.271.74-3.99-3.16-2.52-2.91-2.73-3.84-3.68-3.71
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