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NRG Energy Inc (NYSE:NRG)
Beneish M-Score
-4.02 (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.

NRG Energy Inc has a M-score of -4.02 suggests that the company is not a manipulator.

NRG' s Beneish M-Score Range Over the Past 10 Years
Min: -4.02   Max: 1.39
Current: -4.02

-4.02
1.39

During the past 13 years, the highest Beneish M-Score of NRG Energy Inc was 1.39. The lowest was -4.02. And the median was -2.43.


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 NRG Energy Inc 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 * 1.063+0.528 * 0.8629+0.404 * 0.8533+0.892 * 0.8329+0.115 * 0.9271
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.284+4.679 * -0.2555-0.327 * 1.1929
=-4.02

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $1,251 Mil.
Revenue was 2638 + 3229 + 3020 + 4431 = $13,318 Mil.
Gross Profit was 882 + 1040 + 795 + 1397 = $4,114 Mil.
Total Current Assets was $6,364 Mil.
Total Assets was $31,422 Mil.
Property, Plant and Equipment(Net PPE) was $18,382 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,532 Mil.
Selling, General & Admin. Expense(SGA) was $1,186 Mil.
Total Current Liabilities was $4,514 Mil.
Long-Term Debt was $17,893 Mil.
Net Income was -271 + 82 + -6314 + 66 = $-6,437 Mil.
Non Operating Income was -61 + -124 + 27 + 26 = $-132 Mil.
Cash Flow from Operations was 319 + 554 + -83 + 934 = $1,724 Mil.
Accounts Receivable was $1,413 Mil.
Revenue was 3400 + 3829 + 4192 + 4569 = $15,990 Mil.
Gross Profit was 964 + 766 + 1241 + 1291 = $4,262 Mil.
Total Current Assets was $8,010 Mil.
Total Assets was $40,365 Mil.
Property, Plant and Equipment(Net PPE) was $22,304 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,713 Mil.
Selling, General & Admin. Expense(SGA) was $1,109 Mil.
Total Current Liabilities was $4,469 Mil.
Long-Term Debt was $19,661 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)
=(1251 / 13318) / (1413 / 15990)
=0.09393302 / 0.08836773
=1.063

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)
=(4262 / 15990) / (4114 / 13318)
=0.26654159 / 0.30890524
=0.8629

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 - (6364 + 18382) / 31422) / (1 - (8010 + 22304) / 40365)
=0.21246261 / 0.24900285
=0.8533

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
=13318 / 15990
=0.8329

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))
=(1713 / (1713 + 22304)) / (1532 / (1532 + 18382))
=0.07132448 / 0.0769308
=0.9271

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)
=(1186 / 13318) / (1109 / 15990)
=0.08905241 / 0.06935585
=1.284

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)
=((17893 + 4514) / 31422) / ((19661 + 4469) / 40365)
=0.7130991 / 0.59779512
=1.1929

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
=(-6437 - -132 - 1724) / 31422
=-0.2555

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.

NRG Energy Inc has a M-score of -4.02 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.

NRG Energy Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.63681.21810.83741.4520.84771.10751.37140.85320.77510.9464
GMI 112.09461.17771.29221.22030.94880.9671.09140.9613
AQI 0.69390.92130.8441.24691.12290.76350.95360.97121.25780.8583
SGI 2.32711.07231.14961.30020.98851.0260.92761.34111.40490.9248
DEPI 3.83930.40211.54960.43621.27090.84211.40390.84260.930.8213
SGAI 0.76181.22550.67681.3261.09990.95511.48460.82690.81681.2846
LVGI 1.08450.96451.09050.86280.9711.20321.00551.00991.03031.1704
TATA -0.0047-0.0545-0.0133-0.056-0.0454-0.0131-0.033-0.045-0.0336-0.2361
M-score -1.44-2.60-1.95-1.94-2.62-2.48-2.44-2.54-2.32-3.90

NRG Energy Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.79610.80670.83040.77510.80390.79850.87650.9460.99411.063
GMI 0.95540.96811.08331.09141.11890.98080.92160.9610.84680.8629
AQI 1.01141.07181.24251.25781.24171.12940.99340.85830.81650.8533
SGI 1.46971.42411.371.40491.27651.1941.09540.92510.86850.8329
DEPI 0.86091.0591.00470.930.91020.81060.83750.82130.89410.9271
SGAI 0.73130.73590.81270.81680.94191.01291.12261.29141.30951.284
LVGI 1.00941.03451.05451.03031.01240.98180.98041.17041.15651.1929
TATA -0.0505-0.0508-0.0426-0.0336-0.033-0.037-0.0452-0.2361-0.2361-0.2555
M-score -2.48-2.46-2.35-2.32-2.41-2.64-2.80-3.91-3.98-4.02
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