Switch to:
NRG Energy Inc (NYSE:NRG)
Beneish M-Score
-2.38 (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 -2.38 suggests that the company is not a manipulator.

NRG' s 10-Year Beneish M-Score Range
Min: -3.83   Max: 1.69
Current: -2.38

-3.83
1.69

During the past 13 years, the highest Beneish M-Score of NRG Energy Inc was 1.69. The lowest was -3.83. 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 * 0.9002+0.528 * 0.9661+0.404 * 1.0718+0.892 * 1.4241+0.115 * 1.0441
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7289+4.679 * -0.051-0.327 * 1.0345
=-2.38

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $2,096 Mil.
Revenue was 3621 + 3486 + 2795 + 3490 = $13,392 Mil.
Gross Profit was 804 + 753 + 853 + 1135 = $3,545 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 $1,344 Mil.
Selling, General & Admin. Expense(SGA) was $956 Mil.
Total Current Liabilities was $4,746 Mil.
Long-Term Debt was $18,165 Mil.
Net Income was -97 + -56 + -312 + 124 = $-341 Mil.
Non Operating Income was -21 + -23 + -94 + -1 = $-139 Mil.
Cash Flow from Operations was -21 + 391 + 447 + 901 = $1,718 Mil.
Accounts Receivable was $1,635 Mil.
Revenue was 2929 + 2081 + 2063 + 2331 = $9,404 Mil.
Gross Profit was 878 + 328 + 594 + 605 = $2,405 Mil.
Total Current Assets was $6,943 Mil.
Total Assets was $34,492 Mil.
Property, Plant and Equipment(Net PPE) was $20,454 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,334 Mil.
Selling, General & Admin. Expense(SGA) was $921 Mil.
Total Current Liabilities was $4,411 Mil.
Long-Term Debt was $15,889 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)
=(2096 / 13392) / (1635 / 9404)
=0.15651135 / 0.17386219
=0.9002

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)
=(753 / 9404) / (804 / 13392)
=0.25574224 / 0.26471027
=0.9661

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 - (7757 + 21576) / 37629) / (1 - (6943 + 20454) / 34492)
=0.22046826 / 0.20569987
=1.0718

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
=13392 / 9404
=1.4241

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))
=(1334 / (1334 + 20454)) / (1344 / (1344 + 21576))
=0.06122636 / 0.05863874
=1.0441

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)
=(956 / 13392) / (921 / 9404)
=0.0713859 / 0.09793705
=0.7289

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)
=((18165 + 4746) / 37629) / ((15889 + 4411) / 34492)
=0.6088655 / 0.58854227
=1.0345

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
=(-341 - -139 - 1718) / 37629
=-0.051

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 -2.38 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 0.2630.91020.63081.21650.83741.50510.85011.06541.27451.3257
GMI 0.267511112.46681.29221.18480.9550.9866
AQI 1.01240.98960.82780.9320.8441.24691.12290.76420.95520.9688
SGI 1.11351.14682.07641.06511.14961.30020.98851.0260.92761.3411
DEPI 0.68921.11533.45490.40031.70350.39681.21690.90931.36510.838
SGAI 0.98790.81320.77251.21820.77441.27271.00161.08881.43950.7557
LVGI 0.90290.95551.03710.96051.09110.86240.9711.19681.00691.0139
TATA -0.0837-0.00790.0086-0.0536-0.0147-0.056-0.0455-0.0132-0.0328-0.045
M-score -3.83-2.41-1.58-2.59-2.54-1.21-2.60-2.55-2.52-2.09

NRG Energy Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.00530.98531.06471.27451.41991.53591.27941.32570.87650.9002
GMI 1.4721.25321.11320.9550.82270.97330.92530.98040.96410.9661
AQI 0.70560.68510.81050.95520.98221.08461.10170.96881.01141.0718
SGI 1.03671.00680.9690.92760.96591.06451.2441.34111.46971.4241
DEPI 1.0711.12871.1281.36511.25381.08041.09650.8380.86091.0441
SGAI 1.17771.22171.4411.43951.24621.10070.79570.76820.69550.7289
LVGI 1.26721.22511.08481.00690.99791.01311.00091.01391.00941.0345
TATA -0.0183-0.057-0.06-0.0328-0.0339-0.0198-0.0291-0.0453-0.0507-0.051
M-score -2.51-2.84-2.83-2.52-2.40-2.01-2.09-2.09-2.39-2.38
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK