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NRG Energy Inc (NYSE:NRG)
Beneish M-Score
-2.79 (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 -2.79 suggests that the company is not a manipulator.

NRG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.6   Max: 1.36
Current: -2.79

-3.6
1.36

During the past 13 years, the highest Beneish M-Score of NRG Energy Inc was 1.36. The lowest was -3.60. And the median was -2.40.


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 * 0.8768+0.528 * 0.9284+0.404 * 0.9934+0.892 * 1.095+0.115 * 0.8853
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0903+4.679 * -0.0457-0.327 * 0.9804
=-2.79

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $1,492 Mil.
Revenue was 4431 + 3397 + 3826 + 4192 = $15,846 Mil.
Gross Profit was 1397 + 963 + 764 + 1241 = $4,365 Mil.
Total Current Assets was $8,073 Mil.
Total Assets was $39,988 Mil.
Property, Plant and Equipment(Net PPE) was $21,985 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,693 Mil.
Selling, General & Admin. Expense(SGA) was $1,176 Mil.
Total Current Liabilities was $4,336 Mil.
Long-Term Debt was $19,598 Mil.
Net Income was 66 + -14 + -120 + 119 = $51 Mil.
Non Operating Income was 26 + 5 + 16 + 44 = $91 Mil.
Cash Flow from Operations was 934 + 198 + 260 + 396 = $1,788 Mil.
Accounts Receivable was $1,554 Mil.
Revenue was 4569 + 3621 + 3486 + 2795 = $14,471 Mil.
Gross Profit was 1291 + 804 + 753 + 853 = $3,701 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 $1,499 Mil.
Selling, General & Admin. Expense(SGA) was $985 Mil.
Total Current Liabilities was $4,543 Mil.
Long-Term Debt was $19,919 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)
=(1492 / 15846) / (1554 / 14471)
=0.09415625 / 0.10738719
=0.8768

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)
=(963 / 14471) / (1397 / 15846)
=0.25575289 / 0.27546384
=0.9284

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 - (8073 + 21985) / 39988) / (1 - (7872 + 22181) / 40069)
=0.2483245 / 0.2499688
=0.9934

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
=15846 / 14471
=1.095

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))
=(1499 / (1499 + 22181)) / (1693 / (1693 + 21985))
=0.06330236 / 0.07150097
=0.8853

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)
=(1176 / 15846) / (985 / 14471)
=0.07421431 / 0.06806717
=1.0903

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)
=((19598 + 4336) / 39988) / ((19919 + 4543) / 40069)
=0.59852956 / 0.61049689
=0.9804

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
=(51 - 91 - 1788) / 39988
=-0.0457

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 -2.79 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.80850.63681.21810.83741.4520.84771.10751.27450.91810.7751
GMI 1112.09461.17771.29221.18480.9550.98661.0905
AQI 1.08340.69390.92130.8441.24691.12290.76420.95520.96881.2549
SGI 1.14072.32711.07231.14961.30020.98851.0260.92761.34111.4049
DEPI 1.06613.83930.40211.54960.43621.21690.90931.36510.8380.93
SGAI 0.78320.76181.22550.67681.45621.00161.08881.43950.75570.8205
LVGI 0.97731.08450.96451.09050.86280.9711.19681.00691.01391.0336
TATA -0.0189-0.0007-0.0536-0.0133-0.056-0.0455-0.0132-0.0328-0.045-0.0339
M-score -2.53-1.42-2.59-1.95-1.96-2.61-2.51-2.52-2.46-2.32

NRG Energy Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 1.21181.02140.91810.79610.80670.83040.77510.8040.79880.8768
GMI 0.98150.93160.98660.96140.95811.0791.09051.1240.99350.9284
AQI 1.08461.10170.96881.01141.07181.24251.25491.24171.12940.9934
SGI 1.06451.2441.34111.46971.42411.371.40491.27621.19351.095
DEPI 1.09351.09650.8380.84951.01950.94990.930.91580.8410.8853
SGAI 1.16530.84460.81330.68480.68850.77060.76230.90130.96581.0903
LVGI 1.01311.00091.01391.00941.03451.05451.03361.01240.98180.9804
TATA -0.0195-0.0288-0.045-0.0506-0.051-0.043-0.0339-0.0335-0.0375-0.0457
M-score -2.32-2.33-2.47-2.47-2.47-2.35-2.31-2.40-2.63-2.79
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