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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 -1.52. The lowest was -3.45. And the median was -2.79.
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 * 1.0294||+||0.528 * 0.9147||+||0.404 * 1.027||+||0.892 * 0.9045||+||0.115 * 1.0926|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2022||+||4.679 * -0.0398||-||0.327 * 0.9894|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $714 Mil.|
Revenue was 3124.703 + 2462.562 + 2609.852 + 2508.523 = $10,706 Mil.
Gross Profit was 2231.931 + 1791.38 + 1791.332 + 1649.147 = $7,464 Mil.
Total Current Assets was $4,340 Mil.
Total Assets was $47,738 Mil.
Property, Plant and Equipment(Net PPE) was $29,552 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,053 Mil.
Selling, General & Admin. Expense(SGA) was $303 Mil.
Total Current Liabilities was $3,452 Mil.
Long-Term Debt was $13,887 Mil.
Net Income was 393.204 + 572.59 + 235.242 + 104.849 = $1,306 Mil.
Non Operating Income was 8.711 + 5.483 + 18.027 + -20.534 = $12 Mil.
Cash Flow from Operations was 1000.315 + 719.259 + 532.821 + 941.539 = $3,194 Mil.
|Accounts Receivable was $766 Mil.
Revenue was 3371.406 + 2713.231 + 2920.09 + 2831.318 = $11,836 Mil.
Gross Profit was 2113.596 + 1773.471 + 1882.744 + 1777.801 = $7,548 Mil.
Total Current Assets was $4,117 Mil.
Total Assets was $45,042 Mil.
Property, Plant and Equipment(Net PPE) was $28,204 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,155 Mil.
Selling, General & Admin. Expense(SGA) was $279 Mil.
Total Current Liabilities was $3,454 Mil.
Long-Term Debt was $13,080 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)|
|=||(713.583 / 10705.64)||/||(766.383 / 11836.045)|
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)|
|=||(7547.612 / 11836.045)||/||(7463.79 / 10705.64)|
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 - (4340.035 + 29552.133) / 47738.181)||/||(1 - (4117.346 + 28204.307) / 45041.605)|
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))|
|=||(2155.035 / (2155.035 + 28204.307))||/||(2053.418 / (2053.418 + 29552.133))|
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)|
|=||(303.174 / 10705.64)||/||(278.82 / 11836.045)|
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)|
|=||((13886.66 + 3451.747) / 47738.181)||/||((13080.244 + 3453.826) / 45041.605)|
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|
|=||(1305.885 - 11.687||-||3193.934)||/||47738.181|
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 -2.78 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