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Esterline Technologies Corp (NYSE:ESL)
Beneish M-Score
-2.56 (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 -2.56 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: -2.56

-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 -2.43.


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 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 * 1.1399+0.528 * 1.0622+0.404 * 1.02+0.892 * 0.9585+0.115 * 1.1397
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1011+4.679 * -0.0366-0.327 * 1.1261
=-2.56

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

This Year (Mar16) TTM:Last Year (Jan15) TTM:
Accounts Receivable was $374 Mil.
Revenue was 490.31 + 441.477 + 496.217 + 500.08 = $1,928 Mil.
Gross Profit was 156.173 + 137.719 + 169.796 + 163.651 = $627 Mil.
Total Current Assets was $1,114 Mil.
Total Assets was $3,012 Mil.
Property, Plant and Equipment(Net PPE) was $327 Mil.
Depreciation, Depletion and Amortization(DDA) was $101 Mil.
Selling, General & Admin. Expense(SGA) was $389 Mil.
Total Current Liabilities was $414 Mil.
Long-Term Debt was $864 Mil.
Net Income was 14.973 + 5.084 + 28.497 + 19.81 = $68 Mil.
Non Operating Income was 0 + 0 + 0 + -0.329 = $-0 Mil.
Cash Flow from Operations was 39.232 + 40.652 + 48.522 + 50.482 = $179 Mil.
Accounts Receivable was $342 Mil.
Revenue was 446.344 + 548.059 + 506.309 + 510.861 = $2,012 Mil.
Gross Profit was 145.35 + 193.577 + 177.087 + 179.225 = $695 Mil.
Total Current Assets was $1,204 Mil.
Total Assets was $3,083 Mil.
Property, Plant and Equipment(Net PPE) was $303 Mil.
Depreciation, Depletion and Amortization(DDA) was $111 Mil.
Selling, General & Admin. Expense(SGA) was $369 Mil.
Total Current Liabilities was $379 Mil.
Long-Term Debt was $782 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)
=(374.09 / 1928.084) / (342.399 / 2011.573)
=0.19402163 / 0.17021455
=1.1399

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)
=(695.239 / 2011.573) / (627.339 / 1928.084)
=0.34561957 / 0.32536912
=1.0622

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 - (1113.86 + 327.364) / 3012.04) / (1 - (1203.699 + 303.18) / 3083.39)
=0.52151233 / 0.51129147
=1.02

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
=1928.084 / 2011.573
=0.9585

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))
=(111.421 / (111.421 + 303.18)) / (101.013 / (101.013 + 327.364))
=0.26874272 / 0.23580398
=1.1397

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)
=(389.224 / 1928.084) / (368.783 / 2011.573)
=0.20187087 / 0.18333066
=1.1011

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)
=((863.583 + 413.879) / 3012.04) / ((782.041 + 379.283) / 3083.39)
=0.42411854 / 0.3766387
=1.1261

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
=(68.364 - -0.329 - 178.888) / 3012.04
=-0.0366

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 -2.56 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

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
DSRI 1.20310.85171.10011.04930.96940.94771.06561.06270.89391.0123
GMI 0.98981.02331.01331.00360.93271.02030.95820.98510.95120.9791
AQI 1.2170.84221.19951.0610.91311.1080.88221.21990.97480.97
SGI 1.11681.32991.16381.30271.1710.96111.0711.12541.15970.9887
DEPI 1.03540.86831.01320.98310.83431.14631.02461.11580.80471.0009
SGAI 0.97760.8780.9981.00730.97551.0421.00641.04641.08551.0333
LVGI 0.90030.87940.99841.00450.98180.95351.0141.19320.89850.8623
TATA -0.0253-0.00110.0163-0.0139-0.0001-0.0159-0.0142-0.0173-0.0253-0.0261
M-score -2.18-2.33-2.08-2.21-2.44-2.56-2.50-2.37-2.59-2.58

Esterline Technologies Corp Quarterly Data

Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Dec15Mar16
DSRI 0.9950.96321.00531.03140.91180.99461.04431.0150.98011.1399
GMI 0.96760.97760.98451.01591.0621.07941.08851.07621.07371.0622
AQI 0.970.97690.96290.97080.96780.92510.97950.98190.97111.02
SGI 1.00581.02781.03681.05651.0861.04951.03771.01760.91860.9585
DEPI 1.00090.99160.99121.03290.87050.88170.9270.91531.07431.1397
SGAI 1.04080.98130.95760.88030.91480.98391.03661.10661.13711.1011
LVGI 0.86230.89110.87410.86780.96631.15251.2621.39061.3221.1261
TATA -0.0261-0.0133-0.0125-0.0051-0.0355-0.0293-0.0388-0.0429-0.0284-0.0366
M-score -2.59-2.53-2.48-2.36-2.62-2.63-2.65-2.77-2.80-2.56
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