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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 -2.80.
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 * 0.9093||+||0.528 * 0.9375||+||0.404 * 0.9795||+||0.892 * 0.9186||+||0.115 * 1.0506|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1218||+||4.679 * -0.0658||-||0.327 * 1.0736|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $500 Mil.|
Revenue was 2462.562 + 2609.852 + 2508.523 + 3371.406 = $10,952 Mil.
Gross Profit was 1791.38 + 1791.332 + 1649.147 + 2113.596 = $7,345 Mil.
Total Current Assets was $3,852 Mil.
Total Assets was $45,877 Mil.
Property, Plant and Equipment(Net PPE) was $29,296 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,060 Mil.
Selling, General & Admin. Expense(SGA) was $287 Mil.
Total Current Liabilities was $4,022 Mil.
Long-Term Debt was $13,138 Mil.
Net Income was 572.59 + 235.242 + 104.849 + -718.233 = $194 Mil.
Non Operating Income was 5.483 + 18.027 + -20.534 + 4.124 = $7 Mil.
Cash Flow from Operations was 719.259 + 532.821 + 941.539 + 1011.284 = $3,205 Mil.
|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.
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)|
|=||(499.66 / 10952.343)||/||(598.212 / 11922.749)|
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)|
|=||(7496.468 / 11922.749)||/||(7345.455 / 10952.343)|
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 - (3851.928 + 29295.675) / 45877.042)||/||(1 - (4085.05 + 29075.017) / 46265.651)|
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))|
|=||(2155.81 / (2155.81 + 29075.017))||/||(2060.101 / (2060.101 + 29295.675))|
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)|
|=||(286.796 / 10952.343)||/||(278.302 / 11922.749)|
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)|
|=||((13137.639 + 4021.843) / 45877.042)||/||((12120.424 + 3998.371) / 46265.651)|
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|
|=||(194.448 - 7.1||-||3204.903)||/||45877.042|
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 -3.02 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