Summary of the Beneish Model
A mathematical model that uses 8 variables to identify whether a company has manipulated earnings.
The 8 variables are:
- Day’s Sales in Receivable Index
- Gross Margin Index
- Asset Qualities Index
- Sales Growth Index
- Depreciation Index
- SG&A Index
- Leverage Index
- Total Accruals to Total Assets
M-Score > -2.22 implies manipulation.