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NRG Energy Inc (NYSE:NRG)
Beneish M-Score
-3.90 (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 -3.90 suggests that the company is not a manipulator.

NRG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.9   Max: -0.56
Current: -3.9

-3.9
-0.56

During the past 13 years, the highest Beneish M-Score of NRG Energy Inc was -0.56. The lowest was -3.90. And the median was -2.48.


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 * 0.9464+0.528 * 0.9613+0.404 * 0.8583+0.892 * 0.9248+0.115 * 0.8213
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2846+4.679 * -0.2361-0.327 * 1.1704
=-3.90

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $1,157 Mil.
Revenue was 3020 + 4431 + 3397 + 3826 = $14,674 Mil.
Gross Profit was 795 + 1397 + 963 + 764 = $3,919 Mil.
Total Current Assets was $7,391 Mil.
Total Assets was $32,882 Mil.
Property, Plant and Equipment(Net PPE) was $18,732 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,692 Mil.
Selling, General & Admin. Expense(SGA) was $1,220 Mil.
Total Current Liabilities was $4,375 Mil.
Long-Term Debt was $18,983 Mil.
Net Income was -6314 + 66 + -14 + -120 = $-6,382 Mil.
Non Operating Income was 27 + 26 + 5 + 16 = $74 Mil.
Cash Flow from Operations was -83 + 934 + 198 + 260 = $1,309 Mil.
Accounts Receivable was $1,322 Mil.
Revenue was 4192 + 4569 + 3621 + 3486 = $15,868 Mil.
Gross Profit was 1241 + 1291 + 793 + 749 = $4,074 Mil.
Total Current Assets was $8,408 Mil.
Total Assets was $40,466 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 $1,027 Mil.
Total Current Liabilities was $4,859 Mil.
Long-Term Debt was $19,701 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)
=(1157 / 14674) / (1322 / 15868)
=0.07884694 / 0.08331233
=0.9464

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)
=(1397 / 15868) / (795 / 14674)
=0.25674313 / 0.26707101
=0.9613

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 - (7391 + 18732) / 32882) / (1 - (8408 + 22367) / 40466)
=0.20555319 / 0.239485
=0.8583

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
=14674 / 15868
=0.9248

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))
=(1633 / (1633 + 22367)) / (1692 / (1692 + 18732))
=0.06804167 / 0.08284371
=0.8213

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)
=(1220 / 14674) / (1027 / 15868)
=0.08314025 / 0.06472145
=1.2846

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)
=((18983 + 4375) / 32882) / ((19701 + 4859) / 40466)
=0.71035825 / 0.60692927
=1.1704

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
=(-6382 - 74 - 1309) / 32882
=-0.2361

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 -3.90 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.71371.22640.83741.4520.84771.10751.37140.85320.77510.9464
GMI 1112.46681.29221.18480.9550.98661.09050.9649
AQI 0.69390.92130.8441.24691.12290.76350.95360.97121.25780.8583
SGI 2.07641.06511.14961.30020.98851.0260.92761.34111.40490.9248
DEPI 3.95720.40211.70350.39681.21690.90931.35780.84260.930.8213
SGAI 0.77251.21820.77441.27271.00161.08881.43950.75570.82051.2661
LVGI 1.08450.96451.09050.86280.9711.20321.00551.00991.03031.1704
TATA 0.0052-0.0545-0.0216-0.056-0.0455-0.0131-0.033-0.045-0.0341-0.2361
M-score -1.53-2.60-2.57-1.26-2.61-2.51-2.44-2.52-2.32-3.90

NRG Energy Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.02140.85320.79610.80670.83040.77510.8040.79880.87680.9464
GMI 0.88660.9670.95540.96811.08331.09141.11920.98110.92190.9613
AQI 1.10170.97121.01141.07181.24251.25781.24171.12940.99340.8583
SGI 1.2441.34111.46971.42411.371.40491.27621.19351.0950.9248
DEPI 1.08380.84260.86091.0591.00470.930.91020.81060.83750.8213
SGAI 0.96460.82690.73130.73590.81270.81680.94031.00691.11641.2846
LVGI 1.00091.00991.00941.03451.05451.03031.01240.98180.98041.1704
TATA -0.0292-0.045-0.0505-0.0508-0.0426-0.0336-0.033-0.037-0.0452-0.2361
M-score -2.38-2.54-2.48-2.46-2.35-2.32-2.41-2.64-2.80-3.90
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