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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 -2.35. The lowest was -3.08. And the median was -2.81.
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 * 0.8041||+||0.528 * 1.019||+||0.404 * 1.0807||+||0.892 * 1.0969||+||0.115 * 0.9761|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0266||+||4.679 * -0.0631||-||0.327 * 0.9413|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $561 Mil.|
Revenue was 2831.318 + 3458.11 + 2996.65 + 3208.843 = $12,495 Mil.
Gross Profit was 1777.801 + 2062.452 + 1808.174 + 2030.843 = $7,679 Mil.
Total Current Assets was $4,390 Mil.
Total Assets was $46,528 Mil.
Property, Plant and Equipment(Net PPE) was $28,937 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,128 Mil.
Selling, General & Admin. Expense(SGA) was $273 Mil.
Total Current Liabilities was $3,849 Mil.
Long-Term Debt was $12,530 Mil.
Net Income was 125.007 + 234.916 + 194.281 + 406.053 = $960 Mil.
Non Operating Income was -15.041 + 18.757 + 0.113 + 3.425 = $7 Mil.
Cash Flow from Operations was 998.072 + 1362.926 + 761.406 + 767.157 = $3,890 Mil.
|Accounts Receivable was $636 Mil.
Revenue was 2691.906 + 3351.959 + 2738.208 + 2608.874 = $11,391 Mil.
Gross Profit was 1696.507 + 2076.402 + 1696.392 + 1664.693 = $7,134 Mil.
Total Current Assets was $3,930 Mil.
Total Assets was $43,406 Mil.
Property, Plant and Equipment(Net PPE) was $28,081 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,012 Mil.
Selling, General & Admin. Expense(SGA) was $242 Mil.
Total Current Liabilities was $4,061 Mil.
Long-Term Debt was $12,171 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)|
|=||(561.254 / 12494.921)||/||(636.33 / 11390.947)|
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)|
|=||(2062.452 / 11390.947)||/||(1777.801 / 12494.921)|
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 - (4389.633 + 28936.737) / 46527.854)||/||(1 - (3929.691 + 28081.019) / 43406.446)|
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))|
|=||(2012.076 / (2012.076 + 28081.019))||/||(2127.892 / (2127.892 + 28936.737))|
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)|
|=||(272.622 / 12494.921)||/||(242.103 / 11390.947)|
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)|
|=||((12529.819 + 3848.891) / 46527.854)||/||((12171.367 + 4060.572) / 43406.446)|
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|
|=||(960.257 - 7.254||-||3889.561)||/||46527.854|
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 -2.81 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