Switch to:
GuruFocus has detected 5 Warning Signs with Frontline Ltd $OSTO:FROO.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Frontline Ltd (OSTO:FROo)
Beneish M-Score
-2.89 (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 -2.87 suggests that the company is not a manipulator.

OSTO:FROO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.62   Max: 23.67
Current: -2.89

-3.62
23.67

During the past 13 years, the highest Beneish M-Score of Frontline Ltd was 23.67. The lowest was -3.62. And the median was -2.58.


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 * 0.5041+0.528 * 0.9826+0.404 * 0.9509+0.892 * 1.6711+0.115 * 0.4084
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 2.0941+4.679 * -0.0534-0.327 * 0.9918
=-2.87

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was NOK420 Mil.
Revenue was 1526.45547945 + 1288.17213115 + 1592.65780731 + 1924.60169492 = NOK6,332 Mil.
Gross Profit was 629.417808219 + 608.901639344 + 908.920265781 + 1254.81355932 = NOK3,402 Mil.
Total Current Assets was NOK3,284 Mil.
Total Assets was NOK25,397 Mil.
Property, Plant and Equipment(Net PPE) was NOK19,881 Mil.
Depreciation, Depletion and Amortization(DDA) was NOK1,179 Mil.
Selling, General & Admin. Expense(SGA) was NOK311 Mil.
Total Current Liabilities was NOK1,565 Mil.
Long-Term Debt was NOK10,965 Mil.
Net Income was 156.857876712 + 44.8442622951 + 118.870431894 + 668.694915254 = NOK989 Mil.
Non Operating Income was 108.672945205 + 4.02459016393 + -82.5996677741 + -83.8050847458 = NOK-54 Mil.
Cash Flow from Operations was 288.270547945 + 397.795081967 + 683.936877076 + 1029.38983051 = NOK2,399 Mil.
Accounts Receivable was NOK499 Mil.
Revenue was 1339.33043478 + 890.273405137 + 812.0078125 + 747.545963229 = NOK3,789 Mil.
Gross Profit was 805.72173913 + 406.652858326 + 398.4765625 + 389.592326139 = NOK2,000 Mil.
Total Current Assets was NOK4,065 Mil.
Total Assets was NOK25,074 Mil.
Property, Plant and Equipment(Net PPE) was NOK18,693 Mil.
Depreciation, Depletion and Amortization(DDA) was NOK437 Mil.
Selling, General & Admin. Expense(SGA) was NOK89 Mil.
Total Current Liabilities was NOK2,105 Mil.
Long-Term Debt was NOK10,367 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)
=(420.196917808 / 6331.88711282) / (498.843478261 / 3789.15761565)
=0.06636204 / 0.13165023
=0.5041

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)
=(2000.4434861 / 3789.15761565) / (3402.05327267 / 6331.88711282)
=0.52793884 / 0.537289
=0.9826

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 - (3284.46917808 + 19881.4383562) / 25396.5496575) / (1 - (4064.91304348 + 18692.6695652) / 25073.6347826)
=0.08783249 / 0.09237002
=0.9509

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
=6331.88711282 / 3789.15761565
=1.6711

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))
=(437.408764755 / (437.408764755 + 18692.6695652)) / (1179.14178447 / (1179.14178447 + 19881.4383562))
=0.02286498 / 0.0559881
=0.4084

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)
=(310.553278562 / 6331.88711282) / (88.7441268877 / 3789.15761565)
=0.04904593 / 0.02342054
=2.0941

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)
=((10964.7859589 + 1564.63184932) / 25396.5496575) / ((10367.373913 + 2104.66956522) / 25073.6347826)
=0.49335118 / 0.49741665
=0.9918

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
=(989.267486155 - -53.7072171504 - 2399.3923375) / 25396.5496575
=-0.0534

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 -2.87 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 local exchange's currency.

Frontline Ltd Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.09510.63941.48871.20961.31570.64452.15550.62372.26870.5205
GMI 1.07850.89361.37390.98471.65471.08510.94310.76470.69560.9793
AQI 1.7870.57070.50181.27041.33041.231.43214.93170.23680.9509
SGI 0.80942.02090.40861.08260.61140.76130.25312.14252.26741.6183
DEPI 0.77731.09350.89671.19470.49761.49923.55070.86391.18940.4172
SGAI 1.24486.35210.34970.93970.92551.18190.49060.71071.12812.1288
LVGI 1.1970.93680.96911.00661.1021.04281.0440.29671.75090.9918
TATA -0.0293-0.0302-0.0645-0.0385-0.3233-0.09210.02260.0267-0.0132-0.0551
M-score -2.47-3.16-2.75-2.26-3.65-3.30-1.470.05-0.96-2.92

Frontline Ltd Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 10.76221111.723510.361710.5041
GMI 0.32990.76060.94670.76220.72170.73390.84111.15341.3570.9826
AQI 1.74554.93171.4481.0870.79130.23680.78291.4920.90990.9509
SGI 0.36991.75330.98271.06740.99182.98484.97685.26745.4881.6711
DEPI 2.73471.1781.44384.5483-1.99770.79290.43110.0902-0.30950.4084
SGAI 0.9290.0631-1.8522-2.0474-2.156215.3568-0.81-0.4611-0.37172.0941
LVGI 1.08470.29671.00540.60370.65691.75090.50760.8180.71040.9918
TATA -0.02480.02630.04980.11420.2188-0.0121-0.011-0.0262-0.0532-0.0534
M-score -3.03-0.03-1.57-0.91-1.38-3.291.251.101.61-2.87
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat

{{numOfNotice}}
FEEDBACK