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Summary of the Beneish Model

April 11, 2017

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.

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