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NRG Energy Inc (NYSE:NRG)
Beneish M-Score
-2.27 (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 -2.27 suggests that the company is not a manipulator.

NRG' s 10-Year Beneish M-Score Range
Min: -3.62   Max: -0.48
Current: -2.27

-3.62
-0.48

During the past 13 years, the highest Beneish M-Score of NRG Energy Inc was -0.48. The lowest was -3.62. And the median was -2.41.


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 * 1.1681+0.528 * 0.9642+0.404 * 0.9712+0.892 * 1.3411+0.115 * 0.8426
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.899+4.679 * -0.045-0.327 * 1.0099
=-2.27

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $1,753 Mil.
Revenue was 2795 + 3490 + 2929 + 2081 = $11,295 Mil.
Gross Profit was 853 + 1135 + 870 + 316 = $3,174 Mil.
Total Current Assets was $7,596 Mil.
Total Assets was $33,902 Mil.
Property, Plant and Equipment(Net PPE) was $19,851 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,341 Mil.
Selling, General & Admin. Expense(SGA) was $973 Mil.
Total Current Liabilities was $4,204 Mil.
Long-Term Debt was $15,767 Mil.
Net Income was -312 + 124 + 130 + -328 = $-386 Mil.
Non Operating Income was -94 + -1 + -13 + -21 = $-129 Mil.
Cash Flow from Operations was 447 + 901 + 46 + -124 = $1,270 Mil.
Accounts Receivable was $1,119 Mil.
Revenue was 2063 + 2331 + 2166 + 1862 = $8,422 Mil.
Gross Profit was 583 + 591 + 829 + 279 = $2,282 Mil.
Total Current Assets was $7,972 Mil.
Total Assets was $34,983 Mil.
Property, Plant and Equipment(Net PPE) was $20,153 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,135 Mil.
Selling, General & Admin. Expense(SGA) was $807 Mil.
Total Current Liabilities was $4,670 Mil.
Long-Term Debt was $15,736 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)
=(1753 / 11295) / (1119 / 8422)
=0.15520142 / 0.1328663
=1.1681

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)
=(1135 / 8422) / (853 / 11295)
=0.27095702 / 0.2810093
=0.9642

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 - (7596 + 19851) / 33902) / (1 - (7972 + 20153) / 34983)
=0.19040175 / 0.19603808
=0.9712

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
=11295 / 8422
=1.3411

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))
=(1135 / (1135 + 20153)) / (1341 / (1341 + 19851))
=0.05331642 / 0.0632786
=0.8426

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)
=(973 / 11295) / (807 / 8422)
=0.08614431 / 0.09582047
=0.899

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)
=((15767 + 4204) / 33902) / ((15736 + 4670) / 34983)
=0.58908029 / 0.58331189
=1.0099

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
=(-386 - -129 - 1270) / 33902
=-0.045

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 -2.27 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

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.20671.10751.00530.98531.06471.44641.41991.53591.27941.1681
GMI 1.12321.18481.47941.26931.13510.97720.8380.97930.91720.9642
AQI 0.87270.76350.70560.68510.81050.95360.98221.08461.10170.9712
SGI 0.95521.0261.03671.00680.9690.92760.96591.06451.2441.3411
DEPI 0.94060.84210.9951.05121.14161.40391.30511.13011.10380.8426
SGAI 1.20191.08881.1541.16111.30141.30231.22081.16830.93610.899
LVGI 1.07941.20321.26721.22511.08481.00550.99791.01311.00091.0099
TATA -0.0093-0.0131-0.0183-0.057-0.06-0.033-0.0338-0.0195-0.0288-0.045
M-score -2.43-2.52-2.51-2.83-2.80-2.33-2.38-2.02-2.12-2.27
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