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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 -2.21. The lowest was -2.94. And the median was -2.82.
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 * 1.2006||+||0.528 * 0.9187||+||0.404 * 1.0913||+||0.892 * 0.942||+||0.115 * 1.001|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2402||+||4.679 * -0.0784||-||0.327 * 1.0604|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $643 Mil.|
Revenue was 2648.527 + 3124.703 + 2462.562 + 2609.852 = $10,846 Mil.
Gross Profit was 1792.597 + 2231.931 + 1791.38 + 1791.332 = $7,607 Mil.
Total Current Assets was $3,684 Mil.
Total Assets was $45,904 Mil.
Property, Plant and Equipment(Net PPE) was $28,155 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,123 Mil.
Selling, General & Admin. Expense(SGA) was $327 Mil.
Total Current Liabilities was $3,200 Mil.
Long-Term Debt was $14,492 Mil.
Net Income was -1765.538 + 393.204 + 572.59 + 235.242 = $-565 Mil.
Non Operating Income was 3.406 + 8.711 + 5.483 + 18.027 = $36 Mil.
Cash Flow from Operations was 746.304 + 1000.315 + 719.259 + 532.821 = $2,999 Mil.
|Accounts Receivable was $569 Mil.
Revenue was 2508.523 + 3371.406 + 2713.231 + 2920.09 = $11,513 Mil.
Gross Profit was 1649.147 + 2113.596 + 1773.471 + 1882.744 = $7,419 Mil.
Total Current Assets was $4,067 Mil.
Total Assets was $44,648 Mil.
Property, Plant and Equipment(Net PPE) was $28,044 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,117 Mil.
Selling, General & Admin. Expense(SGA) was $280 Mil.
Total Current Liabilities was $3,090 Mil.
Long-Term Debt was $13,139 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)|
|=||(643.071 / 10845.644)||/||(568.596 / 11513.25)|
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)|
|=||(7418.958 / 11513.25)||/||(7607.24 / 10845.644)|
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 - (3684.268 + 28155.048) / 45904.434)||/||(1 - (4067.412 + 28044.36) / 44647.681)|
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))|
|=||(2117.236 / (2117.236 + 28044.36))||/||(2123.291 / (2123.291 + 28155.048))|
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)|
|=||(327.425 / 10845.644)||/||(280.272 / 11513.25)|
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)|
|=||((14492.237 + 3200.096) / 45904.434)||/||((13138.557 + 3089.958) / 44647.681)|
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|
|=||(-564.502 - 35.627||-||2998.699)||/||45904.434|
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