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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 -2.83.
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 * 0.7139||+||0.528 * 0.9883||+||0.404 * 1.0784||+||0.892 * 0.9733||+||0.115 * 1.0027|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.114||+||4.679 * -0.0624||-||0.327 * 0.9557|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $598 Mil.|
Revenue was 2713.231 + 2920.09 + 2831.318 + 3458.11 = $11,923 Mil.
Gross Profit was 1773.471 + 1882.744 + 1777.801 + 2062.452 = $7,496 Mil.
Total Current Assets was $4,085 Mil.
Total Assets was $46,266 Mil.
Property, Plant and Equipment(Net PPE) was $29,075 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,156 Mil.
Selling, General & Admin. Expense(SGA) was $278 Mil.
Total Current Liabilities was $3,998 Mil.
Long-Term Debt was $12,120 Mil.
Net Income was 153.722 + 302.929 + 125.007 + 234.916 = $817 Mil.
Non Operating Income was -3.769 + 2.718 + -15.041 + 18.757 = $3 Mil.
Cash Flow from Operations was 727.403 + 610.958 + 998.072 + 1362.926 = $3,699 Mil.
|Accounts Receivable was $861 Mil.
Revenue was 2996.65 + 3208.843 + 2691.906 + 3351.959 = $12,249 Mil.
Gross Profit was 1808.174 + 2030.843 + 1696.507 + 2076.402 = $7,612 Mil.
Total Current Assets was $4,245 Mil.
Total Assets was $44,151 Mil.
Property, Plant and Equipment(Net PPE) was $28,308 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,105 Mil.
Selling, General & Admin. Expense(SGA) was $257 Mil.
Total Current Liabilities was $4,128 Mil.
Long-Term Debt was $11,967 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)|
|=||(598.212 / 11922.749)||/||(860.952 / 12249.358)|
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)|
|=||(1882.744 / 12249.358)||/||(1773.471 / 11922.749)|
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 - (4085.05 + 29075.017) / 46265.651)||/||(1 - (4245.133 + 28307.971) / 44150.747)|
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))|
|=||(2105.096 / (2105.096 + 28307.971))||/||(2155.81 / (2155.81 + 29075.017))|
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)|
|=||(278.302 / 11922.749)||/||(256.659 / 12249.358)|
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)|
|=||((12120.424 + 3998.371) / 46265.651)||/||((11967.093 + 4128.069) / 44150.747)|
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|
|=||(816.574 - 2.665||-||3699.359)||/||46265.651|
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 -3.04 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