Beneish M-Score

What is the definition of Beneish M Score?

The M-Score is a mathematical model created by Professor Beneish that uses eight financial ratios to identify whether a company may have manipulated its earnings figures for reporting purposes. You can read a more detailed description of the Beneish M-Score here.

This version is based on the Trailing Twelve Month results - we also have a version based on annual results only, which may be more reliable given the sometimes sparse nature of interim reporting.


Stockopedia explains Beneish M Score...

Many companies can increase their reported earnings by booking sales early, delaying expense recognition, capitalising expenses and other tricks of the trade. Most of these tricks aren't illegal, but regular practice can signify a company that may be getting into bad habits. The M Score predicted such high profile failures as Enron and has even been shown to be useful as a short selling technique.

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