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FirstEnergy Corp (NYSE:FE)
Beneish M-Score
-2.56 (As of Today)

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.

FirstEnergy Corp has a M-score of -2.57 suggests that the company is not a manipulator.

FE' s 10-Year Beneish M-Score Range
Min: -3.13   Max: -2.56
Current: -2.56

-3.13
-2.56

During the past 13 years, the highest Beneish M-Score of FirstEnergy Corp was -2.56. The lowest was -3.13. And the median was -2.70.


Definition

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 FirstEnergy 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 * 1.0964+0.528 * 1.0358+0.404 * 0.9211+0.892 * 1.0245+0.115 * 0.9602
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8005+4.679 * -0.0417-0.327 * 1.0527
=-2.57

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $2,087 Mil.
Revenue was 4189 + 3647 + 4036 + 3519 = $15,391 Mil.
Gross Profit was 2117 + 2035 + 2259 + 2029 = $8,440 Mil.
Total Current Assets was $4,577 Mil.
Total Assets was $51,228 Mil.
Property, Plant and Equipment(Net PPE) was $33,888 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,203 Mil.
Selling, General & Admin. Expense(SGA) was $3,638 Mil.
Total Current Liabilities was $7,737 Mil.
Long-Term Debt was $16,804 Mil.
Net Income was 208 + 142 + 218 + -164 = $404 Mil.
Non Operating Income was 15 + 28 + 14 + -39 = $18 Mil.
Cash Flow from Operations was -92 + 991 + 1178 + 443 = $2,520 Mil.
Accounts Receivable was $1,858 Mil.
Revenue was 3723 + 3493 + 4052 + 3755 = $15,023 Mil.
Gross Profit was 2147 + 1976 + 2353 + 2057 = $8,533 Mil.
Total Current Assets was $3,499 Mil.
Total Assets was $50,424 Mil.
Property, Plant and Equipment(Net PPE) was $33,286 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,133 Mil.
Selling, General & Admin. Expense(SGA) was $4,436 Mil.
Total Current Liabilities was $7,132 Mil.
Long-Term Debt was $15,814 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(2087 / 15391) / (1858 / 15023)
=0.13559873 / 0.12367703
=1.0964

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(2035 / 15023) / (2117 / 15391)
=0.56799574 / 0.54837243
=1.0358

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (4577 + 33888) / 51228) / (1 - (3499 + 33286) / 50424)
=0.24914109 / 0.27048628
=0.9211

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=15391 / 15023
=1.0245

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))
=(1133 / (1133 + 33286)) / (1203 / (1203 + 33888))
=0.03291787 / 0.03428229
=0.9602

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)
=(3638 / 15391) / (4436 / 15023)
=0.23637191 / 0.29528057
=0.8005

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)
=((16804 + 7737) / 51228) / ((15814 + 7132) / 50424)
=0.47905442 / 0.45506108
=1.0527

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(404 - 18 - 2520) / 51228
=-0.0417

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.

FirstEnergy Corp has a M-score of -2.57 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

FirstEnergy Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.12531.09160.94521.13681.018
GMI 1.07371.0010.98450.990.988
AQI 0.90630.94380.88580.94110.9718
SGI 0.9521.02821.21050.94590.9767
DEPI 0.99481.01281.07581.03610.9391
SGAI 0.93041.04721.27191.03310.782
LVGI 1.03740.99020.87561.03811.0315
TATA -0.0485-0.0704-0.0605-0.0322-0.0431
M-score -2.63-2.73-2.68-2.60-2.68

FirstEnergy Corp Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.9450.76480.92530.971.13551.18051.11381.04331.01861.0964
GMI 0.98440.98960.98381.00680.98880.97890.9690.97730.98831.0358
AQI 0.88581.00831.00050.94250.94110.94520.94630.96830.97180.9211
SGI 1.21071.21651.11841.00410.94690.90710.90960.94750.97611.0245
DEPI 1.07580.72730.81340.97951.03611.07381.04310.96670.93910.9602
SGAI 1.27171.1051.03471.04181.03271.13831.16551.15990.78220.8005
LVGI 0.87560.94190.95490.99721.03811.01891.03651.04361.03151.0527
TATA -0.0605-0.0353-0.0336-0.0355-0.032-0.0414-0.047-0.0497-0.0431-0.0417
M-score -2.68-2.70-2.62-2.70-2.60-2.65-2.75-2.79-2.68-2.57
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