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Esterline Technologies (NYSE:ESL)
Beneish M-Score
-2.63 (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 -2.63 suggests that the company is not a manipulator.

ESL' s 10-Year Beneish M-Score Range
Min: -2.91   Max: -1.87
Current: -2.63

-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 -2.42.


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 * 1.0041+0.528 * 1.0732+0.404 * 0.9251+0.892 * 1.0395+0.115 * 0.8817
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9742+4.679 * -0.0293-0.327 * 1.1525
=-2.63

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

This Year (Jan15) TTM:Last Year (Jan14) TTM:
Accounts Receivable was $342 Mil.
Revenue was 446.344 + 485.491 + 531.124 + 529.574 = $1,993 Mil.
Gross Profit was 145.35 + 182.511 + 182.473 + 182.345 = $693 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 $362 Mil.
Total Current Liabilities was $379 Mil.
Long-Term Debt was $782 Mil.
Net Income was 8.319 + -3.472 + 38.908 + 36.904 = $81 Mil.
Non Operating Income was 0 + 0 + -0.533 + 0 = $-1 Mil.
Cash Flow from Operations was 5.196 + 81.649 + 50.263 + 34.529 = $172 Mil.
Accounts Receivable was $328 Mil.
Revenue was 485.94 + 453.185 + 478.068 + 499.562 = $1,917 Mil.
Gross Profit was 170.735 + 184.086 + 178.902 + 181.376 = $715 Mil.
Total Current Assets was $1,096 Mil.
Total Assets was $3,270 Mil.
Property, Plant and Equipment(Net PPE) was $366 Mil.
Depreciation, Depletion and Amortization(DDA) was $114 Mil.
Selling, General & Admin. Expense(SGA) was $357 Mil.
Total Current Liabilities was $384 Mil.
Long-Term Debt was $685 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)
=(342.399 / 1992.533) / (328.016 / 1916.755)
=0.17184107 / 0.1711309
=1.0041

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)
=(182.511 / 1916.755) / (145.35 / 1992.533)
=0.37307794 / 0.3476374
=1.0732

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 - (1203.699 + 303.18) / 3083.39) / (1 - (1096.351 + 366.454) / 3270.335)
=0.51129147 / 0.55270485
=0.9251

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
=1992.533 / 1916.755
=1.0395

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))
=(113.8 / (113.8 + 366.454)) / (111.421 / (111.421 + 303.18))
=0.23695794 / 0.26874272
=0.8817

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)
=(361.709 / 1992.533) / (357.162 / 1916.755)
=0.18153225 / 0.1863368
=0.9742

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)
=((782.041 + 379.283) / 3083.39) / ((685.245 + 383.549) / 3270.335)
=0.3766387 / 0.32681484
=1.1525

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
=(80.659 - -0.533 - 171.637) / 3083.39
=-0.0293

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 -2.63 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

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
DSRI 0.89390.86930.90120.99371.05571.02231.05691.07130.92031.0041
GMI 0.95120.92940.9310.92230.96720.97660.98891.02451.05591.0732
AQI 0.97480.97710.99190.99150.970.97690.96290.97080.96780.9251
SGI 1.15971.08871.04581.00110.9480.96840.98611.01711.07591.0395
DEPI 0.80470.87320.92450.95491.00090.99160.99121.03290.87050.8817
SGAI 1.08551.06771.02761.05571.01010.95360.93850.87090.90550.9742
LVGI 0.89850.86310.87030.84690.86230.89110.87410.86780.96631.1525
TATA -0.0253-0.0369-0.0393-0.0241-0.0261-0.0133-0.0125-0.0051-0.0355-0.0293
M-score -2.59-2.72-2.72-2.61-2.58-2.53-2.47-2.35-2.62-2.63
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