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NRG Energy Inc (NYSE:NRG)
Beneish M-Score
-2.32 (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 -2.32 suggests that the company is not a manipulator.

NRG' s 10-Year Beneish M-Score Range
Min: -3.62   Max: -0.59
Current: -2.32

-3.62
-0.59

During the past 13 years, the highest Beneish M-Score of NRG Energy Inc was -0.59. The lowest was -3.62. And the median was -2.46.


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 * 0.7751+0.528 * 1.0905+0.404 * 1.2549+0.892 * 1.4049+0.115 * 0.93
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8205+4.679 * -0.0339-0.327 * 1.0336
=-2.32

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $1,322 Mil.
Revenue was 4192 + 4569 + 3621 + 3486 = $15,868 Mil.
Gross Profit was 1241 + 1291 + 804 + 753 = $4,089 Mil.
Total Current Assets was $8,582 Mil.
Total Assets was $40,665 Mil.
Property, Plant and Equipment(Net PPE) was $22,367 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,633 Mil.
Selling, General & Admin. Expense(SGA) was $1,042 Mil.
Total Current Liabilities was $4,859 Mil.
Long-Term Debt was $19,900 Mil.
Net Income was 119 + 168 + -97 + -56 = $134 Mil.
Non Operating Income was 44 + 2 + -21 + -23 = $2 Mil.
Cash Flow from Operations was 396 + 744 + -21 + 391 = $1,510 Mil.
Accounts Receivable was $1,214 Mil.
Revenue was 2795 + 3490 + 2929 + 2081 = $11,295 Mil.
Gross Profit was 851 + 1117 + 878 + 328 = $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 $904 Mil.
Total Current Liabilities was $4,204 Mil.
Long-Term Debt was $15,767 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)
=(1322 / 15868) / (1214 / 11295)
=0.08331233 / 0.10748119
=0.7751

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)
=(1291 / 11295) / (1241 / 15868)
=0.2810093 / 0.25768843
=1.0905

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 - (8582 + 22367) / 40665) / (1 - (7596 + 19851) / 33902)
=0.23892782 / 0.19040175
=1.2549

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
=15868 / 11295
=1.4049

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))
=(1341 / (1341 + 19851)) / (1633 / (1633 + 22367))
=0.0632786 / 0.06804167
=0.93

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)
=(1042 / 15868) / (904 / 11295)
=0.06566675 / 0.08003541
=0.8205

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)
=((19900 + 4859) / 40665) / ((15767 + 4204) / 33902)
=0.60885282 / 0.58908029
=1.0336

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
=(134 - 2 - 1510) / 40665
=-0.0339

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 -2.32 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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.06471.37141.41991.21181.02140.85320.79610.80670.83040.7751
GMI 1.13510.97720.83370.9710.91650.96420.95190.96151.07631.0905
AQI 0.81050.95360.98221.08461.10170.97121.01141.07181.24251.2549
SGI 0.9690.92760.96591.06451.2441.34111.46971.42411.371.4049
DEPI 1.14161.40391.29591.11651.08380.84260.86091.04410.98350.93
SGAI 1.30141.30231.17271.10040.8660.83530.7420.75520.8330.8205
LVGI 1.08481.00550.99791.01311.00091.00991.00941.03451.05451.0336
TATA -0.06-0.033-0.0339-0.0198-0.0292-0.045-0.0505-0.0508-0.0426-0.0339
M-score -2.80-2.40-2.37-2.31-2.35-2.54-2.48-2.47-2.36-2.32
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