Switch to:
Esterline Technologies (NYSE:ESL)
Beneish M-Score
-2.45 (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 -2.45 suggests that the company is not a manipulator.

ESL' s 10-Year Beneish M-Score Range
Min: -2.87   Max: -1.87
Current: -2.45

-2.87
-1.87

During the past 13 years, the highest Beneish M-Score of Esterline Technologies was -1.87. The lowest was -2.87. And the median was -2.44.


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 * 0.9495+0.528 * 1.0647+0.404 * 0.9514+0.892 * 1.0731+0.115 * 1.1559
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9153+4.679 * -0.0099-0.327 * 0.9663
=-2.45

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

This Year (Oct14) TTM:Last Year (Oct13) TTM:
Accounts Receivable was $391 Mil.
Revenue was 548.059 + 531.124 + 529.574 + 504.98 = $2,114 Mil.
Gross Profit was 193.577 + 182.473 + 182.345 + 173.295 = $732 Mil.
Total Current Assets was $1,170 Mil.
Total Assets was $3,193 Mil.
Property, Plant and Equipment(Net PPE) was $348 Mil.
Depreciation, Depletion and Amortization(DDA) was $87 Mil.
Selling, General & Admin. Expense(SGA) was $384 Mil.
Total Current Liabilities was $408 Mil.
Long-Term Debt was $610 Mil.
Net Income was -3.472 + 38.908 + 36.904 + 30.078 = $102 Mil.
Non Operating Income was 0 + -0.533 + 0 + 0 = $-1 Mil.
Cash Flow from Operations was 0 + 50.263 + 34.529 + 49.923 = $135 Mil.
Accounts Receivable was $384 Mil.
Revenue was 534.162 + 478.068 + 499.562 + 457.962 = $1,970 Mil.
Gross Profit was 205.373 + 178.902 + 181.376 + 160.345 = $726 Mil.
Total Current Assets was $1,092 Mil.
Total Assets was $3,262 Mil.
Property, Plant and Equipment(Net PPE) was $371 Mil.
Depreciation, Depletion and Amortization(DDA) was $112 Mil.
Selling, General & Admin. Expense(SGA) was $391 Mil.
Total Current Liabilities was $408 Mil.
Long-Term Debt was $668 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)
=(390.901 / 2113.737) / (383.666 / 1969.754)
=0.1849336 / 0.19477864
=0.9495

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)
=(182.473 / 1969.754) / (193.577 / 2113.737)
=0.36857191 / 0.34615943
=1.0647

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 - (1169.504 + 348.235) / 3193.467) / (1 - (1091.715 + 371.197) / 3262.112)
=0.52473628 / 0.55154452
=0.9514

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
=2113.737 / 1969.754
=1.0731

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))
=(112.132 / (112.132 + 371.197)) / (87.443 / (87.443 + 348.235))
=0.23199932 / 0.20070557
=1.1559

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)
=(384.177 / 2113.737) / (391.147 / 1969.754)
=0.18175251 / 0.19857657
=0.9153

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)
=((609.72 + 408.129) / 3193.467) / ((667.859 + 408.092) / 3262.112)
=0.31872852 / 0.32983264
=0.9663

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
=(102.418 - -0.533 - 134.715) / 3193.467
=-0.0099

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 -2.45 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 0.8321.16211.04240.92380.95981.05221.06270.89391.0123
GMI 1.01361.00561.00890.93491.02650.95250.98510.95120.9791
AQI 0.84221.19951.0610.91311.1080.88221.21990.97480.97
SGI 1.36151.10181.31141.22880.9491.08471.12541.15970.9887
DEPI 0.86831.01320.98310.83431.14631.02461.11580.80471.0009
SGAI 0.85011.00431.00210.97451.03711.01121.04641.08551.0333
LVGI 0.87940.99841.00450.98180.95351.0141.19320.89850.8623
TATA -0.0160.0122-0.0323-0.0001-0.0159-0.0142-0.0173-0.0253-0.0261
M-score -2.39-2.10-2.29-2.42-2.55-2.50-2.37-2.59-2.58

Esterline Technologies Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
DSRI 0.76790.89390.86930.90120.99371.01230.97161.00531.02030.9495
GMI 1.06230.95120.92940.9310.92230.97910.99441.00621.04121.0647
AQI 0.96280.97480.97710.99190.99150.970.97690.96290.97080.9514
SGI 1.19321.15971.08871.04581.00110.98871.01891.03681.06791.0731
DEPI 0.77810.80470.87320.92450.95491.00090.99160.99121.03291.1559
SGAI 1.10341.08551.06771.02761.05571.03330.98640.97150.9040.9153
LVGI 0.94770.89850.86310.87030.84690.86230.89610.87410.86780.9663
TATA -0.0359-0.0253-0.0369-0.0393-0.0241-0.0261-0.0133-0.0125-0.0051-0.0099
M-score -2.70-2.59-2.72-2.72-2.61-2.58-2.53-2.47-2.35-2.45
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