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Esterline Technologies (NYSE:ESL)
Beneish M-Score
-2.53 (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 -2.53 suggests that the company is not a manipulator.

ESL' s 10-Year Beneish M-Score Range
Min: -2.91   Max: -1.87
Current: -2.53

-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 * 0.97+0.528 * 0.9944+0.404 * 0.9769+0.892 * 1.0189+0.115 * 0.9916
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9864+4.679 * -0.0133-0.327 * 0.8911
=-2.53

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

This Year (Jan14) TTM:Last Year (Jan13) TTM:
Accounts Receivable was $334 Mil.
Revenue was 504.98 + 534.162 + 478.068 + 499.562 = $2,017 Mil.
Gross Profit was 173.295 + 205.373 + 178.902 + 181.376 = $739 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 $389 Mil.
Total Current Liabilities was $384 Mil.
Long-Term Debt was $685 Mil.
Net Income was 30.078 + 65.863 + 38.238 + 35.522 = $170 Mil.
Non Operating Income was 0 + 0 + 0 + -0.946 = $-1 Mil.
Cash Flow from Operations was 49.923 + 54.493 + 73.595 + 36.088 = $214 Mil.
Accounts Receivable was $338 Mil.
Revenue was 457.962 + 530.656 + 485.949 + 504.831 = $1,979 Mil.
Gross Profit was 160.345 + 204.253 + 172.096 + 184.523 = $721 Mil.
Total Current Assets was $1,048 Mil.
Total Assets was $3,235 Mil.
Property, Plant and Equipment(Net PPE) was $357 Mil.
Depreciation, Depletion and Amortization(DDA) was $110 Mil.
Selling, General & Admin. Expense(SGA) was $387 Mil.
Total Current Liabilities was $383 Mil.
Long-Term Debt was $803 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)
=(333.894 / 2016.772) / (337.851 / 1979.398)
=0.16555863 / 0.17068371
=0.97

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)
=(205.373 / 1979.398) / (173.295 / 2016.772)
=0.36436179 / 0.36640037
=0.9944

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 - (1096.351 + 366.454) / 3270.335) / (1 - (1047.99 + 356.973) / 3235.404)
=0.55270485 / 0.56575346
=0.9769

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
=2016.772 / 1979.398
=1.0189

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))
=(109.64 / (109.64 + 356.973)) / (113.8 / (113.8 + 366.454))
=0.23496988 / 0.23695794
=0.9916

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)
=(388.742 / 2016.772) / (386.801 / 1979.398)
=0.19275456 / 0.19541345
=0.9864

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)
=((685.245 + 383.549) / 3270.335) / ((803.329 + 383.31) / 3235.404)
=0.32681484 / 0.36676687
=0.8911

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
=(169.701 - -0.946 - 214.099) / 3270.335
=-0.0133

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 -2.53 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

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
DSRI 1.01261.08510.98210.77680.89820.85990.90460.991.01670.97
GMI 0.98511.03151.06051.06230.95120.92940.9310.92230.97910.9944
AQI 1.21991.13251.13690.96280.97480.97710.99190.99150.970.9769
SGI 1.12541.16391.16891.19321.15971.08871.04581.00110.98871.0189
DEPI 1.11580.98740.92490.77810.80470.87320.92450.95491.00090.9916
SGAI 1.04641.08671.13251.10341.08551.06771.02761.05571.03330.9864
LVGI 1.19321.22371.22960.94770.89850.86310.87030.84690.86230.8911
TATA -0.0173-0.0191-0.019-0.0359-0.0253-0.0369-0.0393-0.0241-0.0261-0.0133
M-score -2.41-2.36-2.45-2.69-2.59-2.73-2.72-2.61-2.58-2.53
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