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NRG Energy Inc (NYSE:NRG)
Beneish M-Score
-2.36 (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 -2.36 suggests that the company is not a manipulator.

NRG' s 10-Year Beneish M-Score Range
Min: -3.62   Max: 1.36
Current: -2.36

-3.62
1.36

During the past 13 years, the highest Beneish M-Score of NRG Energy Inc was 1.36. The lowest was -3.62. And the median was -2.37.


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 * 0.8304+0.528 * 1.0763+0.404 * 1.2425+0.892 * 1.37+0.115 * 0.9835
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.833+4.679 * -0.0426-0.327 * 1.0545
=-2.36

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $1,554 Mil.
Revenue was 4569 + 3621 + 3486 + 2795 = $14,471 Mil.
Gross Profit was 1291 + 804 + 753 + 851 = $3,699 Mil.
Total Current Assets was $7,872 Mil.
Total Assets was $40,069 Mil.
Property, Plant and Equipment(Net PPE) was $22,181 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,473 Mil.
Selling, General & Admin. Expense(SGA) was $986 Mil.
Total Current Liabilities was $4,543 Mil.
Long-Term Debt was $19,919 Mil.
Net Income was 168 + -97 + -56 + -297 = $-282 Mil.
Non Operating Income was 2 + -21 + -23 + -94 = $-136 Mil.
Cash Flow from Operations was 744 + -21 + 391 + 447 = $1,561 Mil.
Accounts Receivable was $1,366 Mil.
Revenue was 3490 + 2929 + 2081 + 2063 = $10,563 Mil.
Gross Profit was 1117 + 878 + 328 + 583 = $2,906 Mil.
Total Current Assets was $7,249 Mil.
Total Assets was $34,863 Mil.
Property, Plant and Equipment(Net PPE) was $20,600 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,344 Mil.
Selling, General & Admin. Expense(SGA) was $864 Mil.
Total Current Liabilities was $4,382 Mil.
Long-Term Debt was $15,802 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)
=(1554 / 14471) / (1366 / 10563)
=0.10738719 / 0.12931932
=0.8304

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)
=(804 / 10563) / (1291 / 14471)
=0.27511124 / 0.25561468
=1.0763

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 - (7872 + 22181) / 40069) / (1 - (7249 + 20600) / 34863)
=0.2499688 / 0.20118751
=1.2425

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
=14471 / 10563
=1.37

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))
=(1344 / (1344 + 20600)) / (1473 / (1473 + 22181))
=0.06124681 / 0.06227277
=0.9835

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)
=(986 / 14471) / (864 / 10563)
=0.06813627 / 0.08179494
=0.833

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)
=((19919 + 4543) / 40069) / ((15802 + 4382) / 34863)
=0.61049689 / 0.5789519
=1.0545

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
=(-282 - -136 - 1561) / 40069
=-0.0426

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 -2.36 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.80850.63681.21810.83741.4520.84771.10751.37140.8532
GMI 1112.09461.17771.29221.18480.97720.9642
AQI 1.08340.69390.92130.8441.24691.12290.76350.95360.9712
SGI 1.14072.32711.07231.14961.30020.98851.0260.92761.3411
DEPI 1.06613.83930.40211.54960.43621.27090.84211.40390.8426
SGAI 0.78320.76181.22550.67681.3261.09991.08881.30230.8353
LVGI 0.97731.08450.96451.09050.86280.9711.20321.00551.0099
TATA -0.0189-0.0007-0.0536-0.0133-0.056-0.0454-0.0131-0.033-0.045
M-score -2.53-1.42-2.59-1.95-1.94-2.62-2.52-2.40-2.54

NRG Energy Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.98531.06471.37141.41991.21181.02140.85320.79610.80670.8304
GMI 1.26931.13510.97720.83370.9710.91650.96420.95190.96151.0763
AQI 0.68510.81050.95360.98221.08461.10170.97121.01141.07181.2425
SGI 1.00680.9690.92760.96591.06451.2441.34111.46971.42411.37
DEPI 1.05121.14161.40391.29591.11651.08380.84260.86091.04410.9835
SGAI 1.16111.30141.30231.17271.10040.8660.83530.7420.75520.833
LVGI 1.22511.08481.00550.99791.01311.00091.00991.00941.03451.0545
TATA -0.057-0.06-0.033-0.0339-0.0198-0.0292-0.045-0.0505-0.0508-0.0426
M-score -2.83-2.80-2.40-2.37-2.31-2.35-2.54-2.48-2.47-2.36
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