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Frontline Ltd  (OSTO:FROo) Beneish M-Score: -3.83 (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 -3.83 suggests that the company is not a manipulator.

OSTO:FROo' s Beneish M-Score Range Over the Past 10 Years
Min: -4.35   Max: 23.67
Current: -3.83

-4.35
23.67

During the past 13 years, the highest Beneish M-Score of Frontline Ltd was 23.67. The lowest was -4.35. And the median was -2.49.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Frontline Ltd Annual Data

Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16
Beneish M-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -3.24 -1.74 -0.31 -1.29 -2.92

Frontline Ltd Quarterly Data

Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17
Beneish M-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.47 2.09 -2.92 -2.67 -3.83

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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+0.528 * 1.2638+0.404 * 0.5357+0.892 * 0.9729+0.115 * 0.9319
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.4335+4.679 * -0.0539-0.327 * 1.0562
=-3.83

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Jun17) TTM:Last Year (Jun16) TTM:
Accounts Receivable was NOK0 Mil.
Revenue was 1270.28764805 + 1506.18197279 + 1526.45547945 + 1288.17213115 = NOK5,591 Mil.
Gross Profit was 476.226734349 + 725.467687075 + 788.844178082 + 608.901639344 = NOK2,599 Mil.
Total Current Assets was NOK2,780 Mil.
Total Assets was NOK27,251 Mil.
Property, Plant and Equipment(Net PPE) was NOK22,332 Mil.
Depreciation, Depletion and Amortization(DDA) was NOK1,179 Mil.
Selling, General, & Admin. Expense(SGA) was NOK314 Mil.
Total Current Liabilities was NOK1,670 Mil.
Long-Term Debt & Capital Lease Obligation was NOK13,206 Mil.
Net Income was -163.950930626 + 229.761904762 + 156.857876712 + 44.8442622951 = NOK268 Mil.
Non-Recurring Items was -16.3113367174 + 6.34353741497 + 127.457191781 + 4.02459016393 = NOK122 Mil.
Cash Flow from Operations was 250.862944162 + 678.43537415 + 288.270547945 + 397.795081967 = NOK1,615 Mil.
Accounts Receivable was NOK436 Mil.
Revenue was 1592.65780731 + 1924.60169492 + 1339.33043478 + 890.273405137 = NOK5,747 Mil.
Gross Profit was 880.797342193 + 1283.50847458 + 805.72173913 + 406.652858326 = NOK3,377 Mil.
Total Current Assets was NOK2,502 Mil.
Total Assets was NOK24,486 Mil.
Property, Plant and Equipment(Net PPE) was NOK18,396 Mil.
(DDA) was NOK902 Mil.
Selling, General, & Admin. Expense(SGA) was NOK225 Mil.
Total Current Liabilities was NOK1,934 Mil.
Long-Term Debt & Capital Lease Obligation was NOK10,722 Mil.




1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Accounts Receivable 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)
=(0 / 5591.09723144) / (435.772425249 / 5746.86334214)
=0 / 0.07582787
=0

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)
=(3376.68041423 / 5746.86334214) / (2599.44023885 / 5591.09723144)
=0.58756929 / 0.46492489
=1.2638

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 Property, Plant and Equipment to Total Assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (2779.89001692 + 22332.3096447) / 27251.0321489) / (1 - (2502.04318937 + 18396.0299003) / 24485.5730897)
=0.07848629 / 0.14651485
=0.5357

4. SGI = Sales Growth Index

Ratio of Revenue 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
=5591.09723144 / 5746.86334214
=0.9729

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
=(901.652604213 / (901.652604213 + 18396.0299003)) / (1178.76858165 / (1178.76858165 + 22332.3096447))
=0.04672336 / 0.05013673
=0.9319

6. SGAI = Sales, General and Administrative expenses Index

The ratio of c 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)
=(314.391835433 / 5591.09723144) / (225.432788615 / 5746.86334214)
=0.05623079 / 0.0392271
=1.4335

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)
=((13206.0913706 + 1670.43993232) / 27251.0321489) / ((10721.744186 + 1933.81229236) / 24485.5730897)
=0.54590708 / 0.51685768
=1.0562

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
=(267.513113143 - 121.513982642 - 1615.36394822) / 27251.0321489
=-0.0539

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 -3.83 suggests that the company will not be a manipulator.


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