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Beneish M-Score Screener — Screen Stocks for Earnings Manipulation Risk
Mid-cap stocks ranked by the eight-index Beneish M-Score, with a plain-English High Risk / Grey Zone / Low Risk label on every row. Filter by sector or jump straight to the names above the -1.78 threshold that flag likely manipulation.
How to Read the Beneish M-Score
The Beneish M-Score answers a disciplined question with eight financial-ratio indices: do this company's financial statements show the patterns historically associated with earnings manipulation? Accounting professor Messod Beneish built the model in 1999 by comparing the financials of known manipulators — companies that restated earnings due to fraud — against those of clean companies. He identified eight ratios that differed systematically between the two groups and combined them into a single weighted score using logistic regression.
A score above -1.78 is the primary red flag: Beneish found this threshold correctly identified roughly three-quarters of manipulators in his original sample. Scores between -2.22 and -1.78 fall into a grey zone where the model is ambiguous. Scores below -2.22 are consistent with non-manipulators. The screener shows all three bands with color-coded labels so you can filter to the names that warrant closer scrutiny.
The Eight Indices Explained
DSRI (Days Sales Receivable Index) measures whether receivables grew faster than revenue. A ratio above 1 suggests the company may be recognizing revenue before cash is actually collected — a classic manipulation pattern.
GMI (Gross Margin Index) captures whether gross margins deteriorated year over year. Weakening margins create pressure on management to smooth reported results.
AQI (Asset Quality Index) measures the growth of non-productive assets — intangibles, deferred costs — relative to total assets. Rising ratios may signal capitalizing costs that should be expensed.
SGI (Sales Growth Index) captures revenue growth. High-growth companies face stronger incentives to sustain their trajectory, increasing manipulation risk.
DEPI (Depreciation Index) measures whether the depreciation rate slowed. A lower depreciation rate inflates reported earnings — either through a change in method or extended useful lives.
SGAI (SGA Index) tracks whether selling and administrative costs grew faster than revenue. Deteriorating cost control is a quality warning sign.
LVGI (Leverage Index) measures whether leverage rose. Greater debt load increases the pressure to meet covenants or hit earnings targets.
TATA (Total Accruals to Total Assets) is the most powerful single index: it captures the gap between reported net income and operating cash flow, divided by total assets. Large positive accruals — earnings not backed by cash — are the most direct earnings quality red flag.
How to Use This Screener
A high M-Score is a signal to investigate, not an indictment. Many companies in the High Risk band are simply in fast-growing industries where the natural financial ratios happen to resemble those of historical manipulators. Use the screener as a first filter: if a company you are researching appears with a score above -1.78, examine the TATA component first (large accruals are the most reliable red flag), then look at the 10-K for revenue recognition policies, related-party transactions, and the gap between net income and operating cash flow.
For a deeper dive into a single company, use our Beneish M-Score calculator, which shows all eight index values individually. Pair the result with the Piotroski F-Score screener to get a fuller picture of earnings quality alongside financial strength.
Frequently asked questions
Is a high Beneish M-Score proof of fraud?
No. A score above -1.78 means the financial statement patterns resemble those of known manipulators in Beneish's 1999 sample — it is a statistical flag, not a finding of fraud. Many companies score High Risk simply because they are in high-growth industries where DSRI and SGI are naturally elevated. Treat it as a prompt to examine the 10-K more carefully, especially the accruals (TATA) and revenue recognition policies.
How does the M-Score differ from the Piotroski F-Score?
The Piotroski F-Score is a quality metric that measures whether a company's fundamentals are strong and improving across nine pass/fail tests covering profitability, leverage, and efficiency. The Beneish M-Score is specifically designed to detect earnings manipulation risk using eight ratio indices. They are complementary: a company could score well on both (strong, honest fundamentals), poorly on both (weak and potentially manipulating), or in any combination. Using them together gives a fuller picture of earnings quality.
Which Beneish index is the most important?
The TATA (Total Accruals to Total Assets) component carries the highest regression coefficient in Beneish's model and is generally considered the most powerful single indicator. It measures how much of reported net income is backed by operating cash flow — a company with large positive accruals is reporting income it has not yet collected in cash, which is the most direct sign of earnings quality risk.
Why do financial companies often have unusual M-Scores?
The Beneish model was calibrated on manufacturing and commercial companies. Financial firms — banks, insurers, asset managers — have fundamentally different balance sheet structures where receivables, leverage, and depreciation have different meanings. M-Scores for financial companies should be interpreted with caution; consider filtering to non-financial sectors for the cleanest signal.
How often does this screener update?
The screener pulls two consecutive fiscal years of income statement, balance sheet, and cash flow data from Yahoo Finance, computes all eight Beneish indices, and refreshes every 6 hours. Because the M-Score relies on annual financial statements, an individual company's score only changes when it files a new annual report — but the sector context and market cap filters stay current with each refresh.
How do I analyze a specific stock in more depth?
Click any ticker in the table to open its Basis Report stock intelligence page, which includes earnings quality analysis, valuation, analyst ratings, and a full research report. Or use the Beneish M-Score calculator to see all eight index values individually for any ticker you enter. The F-Score screener and Altman Z-Score screener are also useful companions for a complete forensic accounting review.