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Esterline Technologies (NYSE:ESL)
Beneish M-Score
-2.47 (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 -2.47 suggests that the company is not a manipulator.

ESL' s 10-Year Beneish M-Score Range
Min: -2.91   Max: -1.87
Current: -2.47

-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 -2.43.


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 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 * 1.0053+0.528 * 1.0062+0.404 * 0.9629+0.892 * 1.0368+0.115 * 0.9912
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9715+4.679 * -0.0125-0.327 * 0.8741
=-2.47

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

This Year (Apr14) TTM:Last Year (Apr13) TTM:
Accounts Receivable was $362 Mil.
Revenue was 529.574 + 504.98 + 534.162 + 478.068 = $2,047 Mil.
Gross Profit was 182.345 + 173.295 + 205.373 + 178.902 = $740 Mil.
Total Current Assets was $1,139 Mil.
Total Assets was $3,325 Mil.
Property, Plant and Equipment(Net PPE) was $366 Mil.
Depreciation, Depletion and Amortization(DDA) was $115 Mil.
Selling, General & Admin. Expense(SGA) was $389 Mil.
Total Current Liabilities was $388 Mil.
Long-Term Debt was $649 Mil.
Net Income was 36.904 + 30.078 + 65.863 + 38.238 = $171 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 34.529 + 49.923 + 54.493 + 73.595 = $213 Mil.
Accounts Receivable was $348 Mil.
Revenue was 499.562 + 457.962 + 530.656 + 485.949 = $1,974 Mil.
Gross Profit was 181.376 + 160.345 + 204.253 + 172.096 = $718 Mil.
Total Current Assets was $1,024 Mil.
Total Assets was $3,188 Mil.
Property, Plant and Equipment(Net PPE) was $352 Mil.
Depreciation, Depletion and Amortization(DDA) was $109 Mil.
Selling, General & Admin. Expense(SGA) was $386 Mil.
Total Current Liabilities was $379 Mil.
Long-Term Debt was $759 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)
=(362.418 / 2046.784) / (347.718 / 1974.129)
=0.17706705 / 0.17613743
=1.0053

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)
=(173.295 / 1974.129) / (182.345 / 2046.784)
=0.36374016 / 0.36150126
=1.0062

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 - (1138.824 + 366.243) / 3325.414) / (1 - (1023.843 + 351.561) / 3187.586)
=0.54740462 / 0.56851235
=0.9629

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
=2046.784 / 1974.129
=1.0368

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))
=(109.232 / (109.232 + 351.561)) / (115.126 / (115.126 + 366.243))
=0.23705221 / 0.23916372
=0.9912

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)
=(388.934 / 2046.784) / (386.129 / 1974.129)
=0.19002201 / 0.19559461
=0.9715

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)
=((649.254 + 388.16) / 3325.414) / ((758.586 + 379.002) / 3187.586)
=0.31196537 / 0.35688072
=0.8741

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
=(171.083 - 0 - 212.54) / 3325.414
=-0.0125

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 -2.47 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

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
DSRI 1.20240.8321.19981.05420.90130.96871.08221.01260.89821.0167
GMI 0.98671.01361.00561.00890.93491.02650.95250.98510.95120.9791
AQI 1.2170.84221.19951.0610.91311.1080.88221.21990.97480.97
SGI 1.11741.36151.10181.31141.22880.9491.08471.12541.15970.9887
DEPI 1.03540.86831.01320.98310.83431.14631.02461.11580.80471.0009
SGAI 1.00920.85011.00431.00210.97451.03711.01121.04641.08551.0333
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 -2.21-2.39-2.06-2.28-2.45-2.55-2.47-2.41-2.59-2.58

Esterline Technologies Quarterly Data

Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14
DSRI 1.08510.98210.77680.89820.85990.90460.991.01670.971.0053
GMI 1.03151.06051.06230.95120.92940.9310.92230.97910.99441.0062
AQI 1.13251.13690.96280.97480.97710.99190.99150.970.97690.9629
SGI 1.16391.16891.19321.15971.08871.04581.00110.98871.01891.0368
DEPI 0.98740.92490.77810.80470.87320.92450.95491.00090.99160.9912
SGAI 1.08671.13251.10341.08551.06771.02761.05571.03330.98640.9715
LVGI 1.22371.22960.94770.89850.86310.87030.84690.86230.89110.8741
TATA -0.0191-0.019-0.0359-0.0253-0.0369-0.0393-0.0241-0.0261-0.0133-0.0125
M-score -2.36-2.45-2.69-2.59-2.73-2.72-2.61-2.58-2.53-2.47
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