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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 Entergy Corp was -2.28. The lowest was -4.15. And the median was -2.87.
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 Entergy Corp 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 * 0.7397||+||0.528 * 1.0309||+||0.404 * 0.9548||+||0.892 * 1.1096||+||0.115 * 0.9441|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0027||+||4.679 * -0.065||-||0.327 * 0.9956|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $731 Mil.|
Revenue was 3458.11 + 2996.65 + 3208.843 + 2691.906 = $12,356 Mil.
Gross Profit was 2062.452 + 1808.174 + 2030.843 + 1696.507 = $7,598 Mil.
Total Current Assets was $4,265 Mil.
Total Assets was $44,542 Mil.
Property, Plant and Equipment(Net PPE) was $28,491 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,125 Mil.
Selling, General & Admin. Expense(SGA) was $264 Mil.
Total Current Liabilities was $4,454 Mil.
Long-Term Debt was $11,665 Mil.
Net Income was 234.916 + 194.281 + 406.053 + 151.352 = $987 Mil.
Non Operating Income was 18.757 + 0.113 + 3.425 + -21.824 = $0 Mil.
Cash Flow from Operations was 1362.926 + 761.406 + 767.157 + 989.76 = $3,881 Mil.
|Accounts Receivable was $890 Mil.
Revenue was 3351.959 + 2738.208 + 2608.874 + 2436.259 = $11,135 Mil.
Gross Profit was 2076.402 + 1696.392 + 1664.693 + 1621.393 = $7,059 Mil.
Total Current Assets was $3,490 Mil.
Total Assets was $43,324 Mil.
Property, Plant and Equipment(Net PPE) was $27,828 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,951 Mil.
Selling, General & Admin. Expense(SGA) was $237 Mil.
Total Current Liabilities was $3,439 Mil.
Long-Term Debt was $12,308 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)|
|=||(730.619 / 12355.509)||/||(890.171 / 11135.3)|
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)|
|=||(1808.174 / 11135.3)||/||(2062.452 / 12355.509)|
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 - (4264.539 + 28491.081) / 44541.649)||/||(1 - (3489.59 + 27827.515) / 43324.126)|
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))|
|=||(1950.967 / (1950.967 + 27827.515))||/||(2124.638 / (2124.638 + 28491.081))|
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)|
|=||(264.181 / 12355.509)||/||(237.46 / 11135.3)|
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)|
|=||((11665.016 + 4453.567) / 44541.649)||/||((12308.306 + 3439.028) / 43324.126)|
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|
|=||(986.602 - 0.471||-||3881.249)||/||44541.649|
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.
Entergy Corp has a M-score of -2.93 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
Entergy Corp Annual Data
Entergy Corp Quarterly Data