Beneish M-Score
A statistical model that flags the likelihood a company has manipulated its reported earnings.
What it is
The Beneish M-Score is a forensic-accounting model, created by Professor Messod Beneish, that estimates how likely a company is to be manipulating its financial statements. It combines eight financial ratios that each capture a behavior often seen in earnings manipulation, such as ballooning receivables or unusually high accruals. It is a screening flag, not proof of fraud.
Why it matters
A high M-Score is a warning to dig deeper into the quality of a company's reported numbers before trusting headline earnings. The main pitfalls: it can misfire on fast-growing, highly seasonal, or financial firms, and a clean score does not guarantee honest accounting, so treat it as one input among several.
How it's calculated
Eight indexes are computed by comparing this year's figures to last year's (days-sales-in-receivables, gross margin, asset quality, sales growth, depreciation, SG&A, leverage, and total accruals to total assets), then multiplied by the model's weights and summed; a score above roughly -2.22 suggests a higher chance of manipulation.
How Quintarthai uses it
Earnings-quality and manipulation flags surface in Quinn's risk-first analysis, with every underlying figure carrying a click-to-source provenance receipt; explore a name on the app.