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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 -2.81.
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 * 0.695||+||0.528 * 1.0138||+||0.404 * 1.0892||+||0.892 * 1.018||+||0.115 * 0.9903|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0926||+||4.679 * -0.0622||-||0.327 * 0.9434|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $603 Mil.|
Revenue was 2920.09 + 2831.318 + 3458.11 + 2996.65 = $12,206 Mil.
Gross Profit was 1882.744 + 1777.801 + 2062.452 + 1808.174 = $7,531 Mil.
Total Current Assets was $4,140 Mil.
Total Assets was $46,378 Mil.
Property, Plant and Equipment(Net PPE) was $29,026 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,137 Mil.
Selling, General & Admin. Expense(SGA) was $277 Mil.
Total Current Liabilities was $3,765 Mil.
Long-Term Debt was $12,337 Mil.
Net Income was 302.929 + 125.007 + 234.916 + 194.281 = $857 Mil.
Non Operating Income was 2.718 + -15.041 + 18.757 + 0.113 = $7 Mil.
Cash Flow from Operations was 610.958 + 998.072 + 1362.926 + 761.406 = $3,733 Mil.
|Accounts Receivable was $852 Mil.
Revenue was 3208.843 + 2691.906 + 3351.959 + 2738.208 = $11,991 Mil.
Gross Profit was 2030.843 + 1696.507 + 2076.402 + 1696.392 = $7,500 Mil.
Total Current Assets was $4,193 Mil.
Total Assets was $43,877 Mil.
Property, Plant and Equipment(Net PPE) was $28,208 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,056 Mil.
Selling, General & Admin. Expense(SGA) was $249 Mil.
Total Current Liabilities was $3,917 Mil.
Long-Term Debt was $12,230 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)|
|=||(602.837 / 12206.168)||/||(852.093 / 11990.916)|
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)|
|=||(1777.801 / 11990.916)||/||(1882.744 / 12206.168)|
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 - (4139.985 + 29026.262) / 46377.533)||/||(1 - (4193.316 + 28207.908) / 43876.769)|
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))|
|=||(2055.585 / (2055.585 + 28207.908))||/||(2137.458 / (2137.458 + 29026.262))|
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)|
|=||(276.722 / 12206.168)||/||(248.798 / 11990.916)|
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)|
|=||((12336.591 + 3765.425) / 46377.533)||/||((12230.249 + 3917.461) / 43876.769)|
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|
|=||(857.133 - 6.547||-||3733.362)||/||46377.533|
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 -2.99 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