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Esterline Technologies Corp (NYSE:ESL)
Beneish M-Score
-2.53 (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 Corp has a M-score of -2.53 suggests that the company is not a manipulator.

ESL' s Beneish M-Score Range Over the Past 10 Years
Min: -2.84   Max: -1.86
Current: -2.53

-2.84
-1.86

During the past 13 years, the highest Beneish M-Score of Esterline Technologies Corp was -1.86. The lowest was -2.84. 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 Esterline Technologies Corp 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 * 1.1776+0.528 * 1.0404+0.404 * 0.9571+0.892 * 0.8945+0.115 * 1.2267
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.039+4.679 * -0.0317-0.327 * 0.9965
=-2.53

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

This Year (Jun16) TTM:Last Year (Jul15) TTM:
Accounts Receivable was $394 Mil.
Revenue was 517.092 + 490.31 + 441.477 + 331.808 = $1,781 Mil.
Gross Profit was 173.584 + 156.173 + 137.719 + 110.596 = $578 Mil.
Total Current Assets was $1,149 Mil.
Total Assets was $3,004 Mil.
Property, Plant and Equipment(Net PPE) was $327 Mil.
Depreciation, Depletion and Amortization(DDA) was $87 Mil.
Selling, General & Admin. Expense(SGA) was $354 Mil.
Total Current Liabilities was $411 Mil.
Long-Term Debt was $859 Mil.
Net Income was 29.356 + 14.973 + 5.084 + 2.986 = $52 Mil.
Non Operating Income was 0 + 0 + 0 + -11.122 = $-11 Mil.
Cash Flow from Operations was 38.728 + 39.232 + 40.652 + 40.095 = $159 Mil.
Accounts Receivable was $374 Mil.
Revenue was 496.217 + 500.08 + 446.344 + 548.059 = $1,991 Mil.
Gross Profit was 169.796 + 163.651 + 145.35 + 193.577 = $672 Mil.
Total Current Assets was $1,139 Mil.
Total Assets was $3,086 Mil.
Property, Plant and Equipment(Net PPE) was $306 Mil.
Depreciation, Depletion and Amortization(DDA) was $106 Mil.
Selling, General & Admin. Expense(SGA) was $381 Mil.
Total Current Liabilities was $396 Mil.
Long-Term Debt was $913 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)
=(393.632 / 1780.687) / (373.699 / 1990.7)
=0.22105626 / 0.18772241
=1.1776

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)
=(672.374 / 1990.7) / (578.072 / 1780.687)
=0.33775757 / 0.32463426
=1.0404

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 - (1148.549 + 326.775) / 3004.117) / (1 - (1138.542 + 306.391) / 3085.652)
=0.50889929 / 0.53172522
=0.9571

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
=1780.687 / 1990.7
=0.8945

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))
=(105.894 / (105.894 + 306.391)) / (86.537 / (86.537 + 326.775))
=0.2568466 / 0.20937452
=1.2267

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)
=(353.698 / 1780.687) / (380.574 / 1990.7)
=0.19863008 / 0.19117597
=1.039

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)
=((858.753 + 410.547) / 3004.117) / ((912.809 + 395.546) / 3085.652)
=0.42252016 / 0.42401249
=0.9965

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
=(52.399 - -11.122 - 158.707) / 3004.117
=-0.0317

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 Corp has a M-score of -2.53 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 Corp Annual Data

Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Sep15
DSRI 1.16211.04240.92380.95981.05221.06270.94840.9950.91181.1586
GMI 1.00561.00890.93491.02650.95250.98510.95090.96761.0621.0577
AQI 1.19951.0610.91311.1080.88221.21990.97480.970.96780.9774
SGI 1.10181.31141.22880.9491.08471.12541.0931.00581.0860.8651
DEPI 1.01320.98310.83431.14631.02461.11580.80471.00090.87051.1769
SGAI 1.00431.00210.97451.03711.01121.04641.05351.04080.91481.1005
LVGI 0.99841.00450.98180.95351.0141.19320.89850.86230.96631.3341
TATA 0.0163-0.0139-0.0001-0.0159-0.0142-0.0173-0.0253-0.0261-0.0355-0.0244
M-score -2.08-2.20-2.42-2.55-2.50-2.37-2.60-2.59-2.62-2.65

Esterline Technologies Corp Quarterly Data

Apr14Jul14Oct14Jan15Apr15Jul15Sep15Dec15Mar16Jun16
DSRI 1.00531.03140.91180.99461.04431.0151.15861.13551.10571.1776
GMI 0.98451.01591.0621.07941.08851.07621.05771.05131.0411.0404
AQI 0.96290.97080.96780.92510.97950.98190.97741.01380.97270.9571
SGI 1.03681.05651.0861.04951.03771.01760.86510.87970.87960.8945
DEPI 0.99121.03290.87050.88170.9270.91531.17691.19011.20211.2267
SGAI 0.95760.88030.91480.98391.03661.10661.10051.07031.05081.039
LVGI 0.87410.86780.96631.15251.2621.39061.33411.11871.07730.9965
TATA -0.0125-0.0051-0.0355-0.0293-0.0388-0.0429-0.0244-0.0383-0.0351-0.0317
M-score -2.48-2.36-2.62-2.63-2.65-2.77-2.65-2.64-2.65-2.53
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