Switch to:
Esterline Technologies (NYSE:ESL)
Beneish M-Score
-2.65 (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.

Esterline Technologies has a M-score of -2.65 suggests that the company is not a manipulator.

ESL' s 10-Year Beneish M-Score Range
Min: -2.91   Max: -1.87
Current: -2.65

-2.91
-1.87

During the past 13 years, the highest Beneish M-Score of Esterline Technologies was -1.87. The lowest was -2.91. And the median was -2.43.


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 Esterline Technologies 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 * 1.0644+0.528 * 1.077+0.404 * 0.9795+0.892 * 1.0181+0.115 * 0.927
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0187+4.679 * -0.0388-0.327 * 1.262
=-2.65

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

This Year (Apr15) TTM:Last Year (Apr14) TTM:
Accounts Receivable was $385 Mil.
Revenue was 500.08 + 446.344 + 485.491 + 531.124 = $1,963 Mil.
Gross Profit was 163.651 + 145.35 + 182.511 + 182.473 = $674 Mil.
Total Current Assets was $1,167 Mil.
Total Assets was $3,176 Mil.
Property, Plant and Equipment(Net PPE) was $307 Mil.
Depreciation, Depletion and Amortization(DDA) was $107 Mil.
Selling, General & Admin. Expense(SGA) was $364 Mil.
Total Current Liabilities was $408 Mil.
Long-Term Debt was $843 Mil.
Net Income was 19.81 + 8.319 + -3.472 + 38.908 = $64 Mil.
Non Operating Income was -0.329 + 0 + 0 + -0.533 = $-1 Mil.
Cash Flow from Operations was 50.482 + 5.196 + 81.649 + 50.263 = $188 Mil.
Accounts Receivable was $355 Mil.
Revenue was 510.861 + 485.94 + 453.185 + 478.068 = $1,928 Mil.
Gross Profit was 179.225 + 170.735 + 184.086 + 178.902 = $713 Mil.
Total Current Assets was $1,139 Mil.
Total Assets was $3,325 Mil.
Property, Plant and Equipment(Net PPE) was $366 Mil.
Depreciation, Depletion and Amortization(DDA) was $115 Mil.
Selling, General & Admin. Expense(SGA) was $351 Mil.
Total Current Liabilities was $388 Mil.
Long-Term Debt was $649 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)
=(384.662 / 1963.039) / (354.937 / 1928.054)
=0.1959523 / 0.1840908
=1.0644

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)
=(145.35 / 1928.054) / (163.651 / 1963.039)
=0.36977595 / 0.34333755
=1.077

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 - (1166.704 + 306.598) / 3176.368) / (1 - (1138.824 + 366.243) / 3325.414)
=0.53616772 / 0.54740462
=0.9795

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
=1963.039 / 1928.054
=1.0181

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))
=(115.126 / (115.126 + 366.243)) / (106.598 / (106.598 + 306.598))
=0.23916372 / 0.2579841
=0.927

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)
=(363.981 / 1963.039) / (350.919 / 1928.054)
=0.1854171 / 0.18200683
=1.0187

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)
=((842.954 + 407.592) / 3176.368) / ((649.254 + 388.16) / 3325.414)
=0.39370312 / 0.31196537
=1.262

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
=(63.565 - -0.862 - 187.59) / 3176.368
=-0.0388

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.

Esterline Technologies has a M-score of -2.65 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.

Esterline Technologies Annual Data

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
DSRI 0.8321.16211.04240.92380.95981.05221.06270.89391.05570.9118
GMI 1.01361.00561.00890.93491.02650.95250.98510.95120.96721.062
AQI 0.84221.19951.0610.91311.1080.88221.21990.97480.970.9678
SGI 1.36151.10181.31141.22880.9491.08471.12541.15970.9481.086
DEPI 0.86831.01320.98310.83431.14631.02461.11580.80471.00090.8705
SGAI 0.85011.00431.00210.97451.03711.01121.04641.08551.01010.9148
LVGI 0.87940.99841.00450.98180.95351.0141.19320.89850.86230.9663
TATA -0.0160.0122-0.0323-0.0001-0.0159-0.0142-0.0173-0.0253-0.0261-0.0355
M-score -2.39-2.10-2.29-2.42-2.55-2.50-2.37-2.59-2.58-2.62

Esterline Technologies Quarterly Data

Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15
DSRI 0.86930.90120.99371.05571.02231.06721.08140.92891.01371.0644
GMI 0.92940.9310.92230.96720.97660.98371.01931.05071.06791.077
AQI 0.97710.99190.99150.970.97690.96290.97080.96780.92510.9795
SGI 1.08871.04581.00110.9480.96840.97671.00761.0661.02981.0181
DEPI 0.87320.92450.95491.00090.99160.99121.03290.87050.88170.927
SGAI 1.06771.02761.05571.01010.95360.93050.8630.89740.9661.0187
LVGI 0.86310.87030.84690.86230.89110.87410.86780.96631.15251.262
TATA -0.0369-0.0393-0.0241-0.0261-0.0133-0.0125-0.0051-0.0355-0.0293-0.0388
M-score -2.72-2.72-2.61-2.58-2.53-2.47-2.35-2.63-2.63-2.65
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)

GuruFocus Premium Plus Membership

FEEDBACK