---
title: "Definition of M-Score"
url: https://signalscreener.fr/definition/beneish-m/
markdown_url: https://signalscreener.fr/definition/beneish-m.md
description: "A mathematical model that uses financial ratios to detect potential earnings manipulation or accounting fraud."
type: glossary-definition
site: Signal Screener
language: en
keywords:
  - "M-Score"
  - "Beneish M-Score"
translations:
  de: https://signalscreener.fr/de/definition/beneish-m.md
  es: https://signalscreener.fr/es/definition/beneish-m.md
  fr: https://signalscreener.fr/fr/definition/beneish-m.md
  zh: https://signalscreener.fr/zh/definition/beneish-m.md
---

# Beneish M-Score

## What is M-Score?

A mathematical model that uses financial ratios to detect potential earnings manipulation or accounting fraud.

## Think of it like this

Like a lie detector for financial statements - it flags companies whose numbers look too good to be true.

## Formula

```
M-Score = -4.84 + 0.92×DSRI + 0.528×GMI + 0.404×AQI + 0.892×SGI + 0.115×DEPI - 0.172×SGAI + 4.679×TATA - 0.327×LVGI
```

- **DSRI**: Days Sales in Receivables Index
- **GMI**: Gross Margin Index
- **AQI**: Asset Quality Index
- **TATA**: Total Accruals to Total Assets

## Why it matters

- Helps identify potential fraud before it's revealed
- Created by Professor Messod Beneish at Indiana University
- Successfully flagged Enron before its collapse
- Combines 8 financial statement variables

## What's a good value?

| Range | Rating | What it means |
|---|---|---|
| < -2.22 | Normal | Low probability of manipulation |
| -2.22 to -1.78 | Gray Zone | Needs further investigation |
| > -1.78 | Manipulator | High probability of manipulation |

## Real-world example

Enron had an M-Score above -1.78 for years before the fraud was discovered.

---

This is educational content, not financial advice.

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