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NRG Energy Inc (NYSE:NRG)
Beneish M-Score
-2.64 (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 -2.64 suggests that the company is not a manipulator.

NRG' s 10-Year Beneish M-Score Range
Min: -3.62   Max: 1.36
Current: -2.64

-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 -2.39.


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 * 0.7988+0.528 * 0.9836+0.404 * 1.1294+0.892 * 1.1935+0.115 * 0.8106
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9971+4.679 * -0.0375-0.327 * 0.9818
=-2.64

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $1,413 Mil.
Revenue was 3397 + 3826 + 4192 + 4569 = $15,984 Mil.
Gross Profit was 963 + 764 + 1241 + 1291 = $4,259 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 $1,102 Mil.
Total Current Liabilities was $4,469 Mil.
Long-Term Debt was $19,661 Mil.
Net Income was -14 + -120 + 119 + 168 = $153 Mil.
Non Operating Income was 5 + 16 + 44 + 2 = $67 Mil.
Cash Flow from Operations was 198 + 260 + 396 + 744 = $1,598 Mil.
Accounts Receivable was $1,482 Mil.
Revenue was 3621 + 3486 + 2795 + 3490 = $13,392 Mil.
Gross Profit was 793 + 749 + 851 + 1117 = $3,510 Mil.
Total Current Assets was $7,757 Mil.
Total Assets was $37,629 Mil.
Property, Plant and Equipment(Net PPE) was $21,576 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,324 Mil.
Selling, General & Admin. Expense(SGA) was $926 Mil.
Total Current Liabilities was $4,746 Mil.
Long-Term Debt was $18,165 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)
=(1413 / 15984) / (1482 / 13392)
=0.0884009 / 0.11066308
=0.7988

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)
=(764 / 13392) / (963 / 15984)
=0.26209677 / 0.26645395
=0.9836

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 - (8010 + 22304) / 40365) / (1 - (7757 + 21576) / 37629)
=0.24900285 / 0.22046826
=1.1294

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
=15984 / 13392
=1.1935

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))
=(1324 / (1324 + 21576)) / (1713 / (1713 + 22304))
=0.05781659 / 0.07132448
=0.8106

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)
=(1102 / 15984) / (926 / 13392)
=0.06894394 / 0.06914576
=0.9971

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)
=((19661 + 4469) / 40365) / ((18165 + 4746) / 37629)
=0.59779512 / 0.6088655
=0.9818

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
=(153 - 67 - 1598) / 40365
=-0.0375

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 -2.64 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 0.80850.63681.21810.83741.4520.84771.10751.37140.85320.7751
GMI 1112.09461.17771.29221.18480.97720.96421.0905
AQI 1.08340.69390.92130.8441.24691.12290.76350.95360.97121.2549
SGI 1.14072.32711.07231.14961.30020.98851.0260.92761.34111.4049
DEPI 1.06613.83930.40211.54960.43621.27090.84211.40390.84260.93
SGAI 0.78320.76181.22550.67681.3261.09991.08881.30230.83530.8205
LVGI 0.97731.08450.96451.09050.86280.9711.20321.00551.00991.0336
TATA -0.0189-0.0007-0.0536-0.0133-0.056-0.0454-0.0131-0.033-0.045-0.0339
M-score -2.53-1.42-2.59-1.95-1.94-2.62-2.52-2.40-2.54-2.32

NRG Energy Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.41991.21181.02140.85320.79610.80670.83040.77510.8040.7988
GMI 0.83370.9710.91650.96420.9530.96561.08071.09451.1220.9836
AQI 0.98221.08461.10170.97121.01141.07181.24251.25491.24171.1294
SGI 0.96591.06451.2441.34111.46971.42411.371.40491.27621.1935
DEPI 1.29591.11651.08380.84260.86091.0590.98350.930.91020.8106
SGAI 1.17271.10040.8660.83530.73870.74310.82030.80870.93090.9971
LVGI 0.99791.01311.00091.00991.00941.03451.05451.03361.01240.9818
TATA -0.0339-0.0198-0.0292-0.045-0.0505-0.0508-0.0426-0.0339-0.0335-0.0375
M-score -2.37-2.31-2.35-2.54-2.48-2.47-2.35-2.32-2.41-2.64
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