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NRG Energy Inc (NYSE:NRG)
Beneish M-Score
-2.41 (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 -2.41 suggests that the company is not a manipulator.

NRG' s 10-Year Beneish M-Score Range
Min: -3.62   Max: 1.36
Current: -2.41

-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 -2.36.


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 * 0.8765+0.528 * 0.9488+0.404 * 1.0114+0.892 * 1.4697+0.115 * 0.8609
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7708+4.679 * -0.0506-0.327 * 1.0094
=-2.41

* 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 $1,265 Mil.
Revenue was 3486 + 2795 + 3490 + 2929 = $12,700 Mil.
Gross Profit was 753 + 853 + 1135 + 870 = $3,611 Mil.
Total Current Assets was $8,383 Mil.
Total Assets was $34,961 Mil.
Property, Plant and Equipment(Net PPE) was $19,644 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,356 Mil.
Selling, General & Admin. Expense(SGA) was $938 Mil.
Total Current Liabilities was $4,225 Mil.
Long-Term Debt was $16,803 Mil.
Net Income was -56 + -312 + 124 + 130 = $-114 Mil.
Non Operating Income was -23 + -94 + -1 + -13 = $-131 Mil.
Cash Flow from Operations was 391 + 447 + 901 + 46 = $1,785 Mil.
Accounts Receivable was $982 Mil.
Revenue was 2081 + 2063 + 2331 + 2166 = $8,641 Mil.
Gross Profit was 328 + 583 + 591 + 829 = $2,331 Mil.
Total Current Assets was $8,031 Mil.
Total Assets was $35,371 Mil.
Property, Plant and Equipment(Net PPE) was $20,404 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,201 Mil.
Selling, General & Admin. Expense(SGA) was $828 Mil.
Total Current Liabilities was $5,162 Mil.
Long-Term Debt was $15,914 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)
=(1265 / 12700) / (982 / 8641)
=0.0996063 / 0.11364425
=0.8765

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)
=(853 / 8641) / (753 / 12700)
=0.26976044 / 0.28433071
=0.9488

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 - (8383 + 19644) / 34961) / (1 - (8031 + 20404) / 35371)
=0.19833529 / 0.19609284
=1.0114

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
=12700 / 8641
=1.4697

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))
=(1201 / (1201 + 20404)) / (1356 / (1356 + 19644))
=0.05558898 / 0.06457143
=0.8609

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)
=(938 / 12700) / (828 / 8641)
=0.07385827 / 0.09582224
=0.7708

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)
=((16803 + 4225) / 34961) / ((15914 + 5162) / 35371)
=0.60147021 / 0.59585536
=1.0094

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
=(-114 - -131 - 1785) / 34961
=-0.0506

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 -2.41 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 0.80850.63681.21810.96011.31270.81781.10751.44641.1681
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 -2.53-1.42-2.59-1.84-2.07-2.64-2.52-2.33-2.26

NRG Energy Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.10751.00530.98531.06471.44641.41991.53591.27941.16810.8765
GMI 1.18481.47941.26931.13510.97720.83370.97430.91340.96060.9488
AQI 0.76350.70560.68510.81050.95360.98221.08461.10170.97121.0114
SGI 1.0261.03671.00680.9690.92760.96591.06451.2441.34111.4697
DEPI 0.84210.9951.05121.14161.40391.29591.13011.10380.84260.8609
SGAI 1.08881.1541.16111.30141.30231.17271.12550.90210.86760.7708
LVGI 1.20321.26721.22511.08481.00550.99791.01311.00091.00991.0094
TATA -0.0131-0.0183-0.057-0.06-0.033-0.0339-0.0196-0.0289-0.0452-0.0506
M-score -2.52-2.51-2.83-2.80-2.33-2.37-2.01-2.12-2.26-2.41
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