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Northeast Utilities (NYSE:NU)
Beneish M-Score
0.00 (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.

Northeast Utilities has a M-score of signals that the company is a manipulator.

NU' s 10-Year Beneish M-Score Range
Min: 0   Max: 0
Current: 0

During the past 13 years, the highest Beneish M-Score of Northeast Utilities was 0.00. The lowest was 0.00. And the median was 0.00.


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 Northeast Utilities 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 * +0.528 * +0.404 * +0.892 * +0.115 *
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * +4.679 * -0.327 *
=

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $990 Mil.
Revenue was 1777.729 + 1892.59 + 1635.862 + 1995.023 = $7,301 Mil.
Gross Profit was 1482.777 + 1140.612 + 1053.418 + 1141.443 = $4,818 Mil.
Total Current Assets was $2,087 Mil.
Total Assets was $27,796 Mil.
Property, Plant and Equipment(Net PPE) was $17,576 Mil.
Depreciation, Depletion and Amortization(DDA) was $817 Mil.
Selling, General & Admin. Expense(SGA) was $296 Mil.
Total Current Liabilities was $3,276 Mil.
Long-Term Debt was $7,777 Mil.
Net Income was 177.397 + 209.501 + 171.021 + 228.089 = $786 Mil.
Non Operating Income was 51.549 + -8.945 + 4.944 + 7.765 = $55 Mil.
Cash Flow from Operations was 486.571 + 407.944 + 295.881 + 473.143 = $1,664 Mil.
Accounts Receivable was $1,009 Mil.
Revenue was 1683.952 + 1861.529 + 1628.684 + 1099.623 = $6,274 Mil.
Gross Profit was 1348.787 + 1160.452 + 1013.181 + 667.006 = $4,189 Mil.
Total Current Assets was $2,227 Mil.
Total Assets was $28,303 Mil.
Property, Plant and Equipment(Net PPE) was $16,605 Mil.
Depreciation, Depletion and Amortization(DDA) was $599 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $3,644 Mil.
Long-Term Debt was $7,282 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)
=(990.373 / 7301.204) / (1008.862 / 6273.788)
=0.13564516 / 0.16080588
=

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)
=(1140.612 / 6273.788) / (1482.777 / 7301.204)
=0.66776659 / 0.6599254
=

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 - (2087.049 + 17576.186) / 27795.537) / (1 - (2227.295 + 16605.01) / 28302.824)
=0.29257582 / 0.33461392
=

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
=7301.204 / 6273.788
=

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))
=(598.772 / (598.772 + 16605.01)) / (817.099 / (817.099 + 17576.186))
=0.03480467 / 0.04442377
=

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)
=(296.149 / 7301.204) / (0 / 6273.788)
=0.04056167 / 0
=

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)
=((7776.833 + 3275.651) / 27795.537) / ((7282.295 + 3643.69) / 28302.824)
=0.3976352 / 0.38603869
=

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
=(786.008 - 55.313 - 1663.539) / 27795.537
=-0.0336

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.

Northeast Utilities has a M-score of signals that the company is likely to 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.

Northeast Utilities Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.8435
GMI 1.0119
AQI 0.8744
SGI 1.1638
DEPI 0.7835
SGAI 1.1029
LVGI 1.03
TATA -0.0326
M-score -2.73

Northeast Utilities Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI
GMI
AQI
SGI
DEPI
SGAI
LVGI
TATA
M-score
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