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Esterline Technologies Corp (NYSE:ESL)
Beneish M-Score
-2.76 (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 -2.76 suggests that the company is not a manipulator.

ESL' s Beneish M-Score Range Over the Past 10 Years
Min: -2.91   Max: -1.87
Current: -2.76

-2.91
-1.87

During the past 13 years, the highest Beneish M-Score of Esterline Technologies Corp 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 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 * 0.7182+0.528 * 1.0716+0.404 * 0.9711+0.892 * 1.2535+0.115 * 0.8665
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1239+4.679 * -0.0284-0.327 * 1.322
=-2.76

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

This Year (Dec15) TTM:Last Year (Oct14) TTM:
Accounts Receivable was $342 Mil.
Revenue was 441.477 + 496.217 + 500.08 + 446.344 = $1,884 Mil.
Gross Profit was 137.719 + 169.796 + 163.651 + 145.35 = $617 Mil.
Total Current Assets was $1,099 Mil.
Total Assets was $2,919 Mil.
Property, Plant and Equipment(Net PPE) was $308 Mil.
Depreciation, Depletion and Amortization(DDA) was $101 Mil.
Selling, General & Admin. Expense(SGA) was $380 Mil.
Total Current Liabilities was $399 Mil.
Long-Term Debt was $831 Mil.
Net Income was 5.084 + 28.497 + 19.81 + 8.319 = $62 Mil.
Non Operating Income was 0 + 0 + -0.329 + 0 = $-0 Mil.
Cash Flow from Operations was 40.652 + 48.522 + 50.482 + 5.196 = $145 Mil.
Accounts Receivable was $380 Mil.
Revenue was 0 + 506.309 + 510.861 + 485.94 = $1,503 Mil.
Gross Profit was 0 + 177.087 + 179.225 + 170.735 = $527 Mil.
Total Current Assets was $1,170 Mil.
Total Assets was $3,193 Mil.
Property, Plant and Equipment(Net PPE) was $319 Mil.
Depreciation, Depletion and Amortization(DDA) was $87 Mil.
Selling, General & Admin. Expense(SGA) was $270 Mil.
Total Current Liabilities was $408 Mil.
Long-Term Debt was $610 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)
=(342.008 / 1884.118) / (379.889 / 1503.11)
=0.18152154 / 0.25273533
=0.7182

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)
=(169.796 / 1503.11) / (137.719 / 1884.118)
=0.35063768 / 0.3272173
=1.0716

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 - (1098.528 + 307.586) / 2919.322) / (1 - (1169.504 + 319.342) / 3193.467)
=0.51834227 / 0.53378382
=0.9711

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
=1884.118 / 1503.11
=1.2535

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))
=(87.443 / (87.443 + 319.342)) / (101.481 / (101.481 + 307.586))
=0.21496122 / 0.24807917
=0.8665

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)
=(380.457 / 1884.118) / (270.051 / 1503.11)
=0.20192844 / 0.1796615
=1.1239

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)
=((831.358 + 398.737) / 2919.322) / ((609.72 + 408.129) / 3193.467)
=0.42136325 / 0.31872852
=1.322

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
=(61.71 - -0.329 - 144.852) / 2919.322
=-0.0284

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 -2.76 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 1.20240.8321.16211.04240.92380.95981.05221.06270.94840.995
GMI 0.98671.01361.00561.00890.93491.02650.95250.98510.95090.9676
AQI 1.2170.84221.19951.0610.91311.1080.88221.21990.97480.97
SGI 1.11741.36151.10181.31141.22880.9491.08471.12541.0931.0058
DEPI 1.03540.86831.01320.98310.83431.14631.02461.11580.80471.0009
SGAI 1.00920.85011.00431.00210.97451.03711.01121.04641.05351.0408
LVGI 0.90030.87940.99841.00450.98180.95351.0141.19320.89850.8623
TATA -0.0296-0.0160.0122-0.0323-0.0001-0.0159-0.0142-0.0173-0.0253-0.0261
M-score -2.21-2.39-2.10-2.29-2.42-2.55-2.50-2.37-2.60-2.59

Esterline Technologies Corp Quarterly Data

Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Dec15
DSRI 1.05510.9950.96321.00531.03141.24421.36711.43831.40050.7182
GMI 0.92080.96760.97760.98451.01591.06411.08841.10511.09531.0716
AQI 0.99150.970.97690.96290.97080.96780.92510.97950.98190.9711
SGI 0.94281.00581.02781.03681.05650.79580.76350.75350.73741.2535
DEPI 0.95491.00090.99160.99121.03291.07931.10421.17911.16680.8665
SGAI 1.02861.04080.98130.95760.88030.92551.00691.07141.1491.1239
LVGI 0.84690.86230.89110.87410.86780.96631.15251.2621.39061.322
TATA -0.0241-0.0261-0.0133-0.0125-0.0051-0.0089-0.0017-0.012-0.0153-0.0284
M-score -2.60-2.59-2.53-2.48-2.36-2.43-2.38-2.38-2.51-2.76
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