From the original Beneish paper

Total accruals are calculated as the change in working capital accounts other than cash less depreciation. Either total accruals or a partition thereof has been used in prior work to assess the extent to which managers make discretionary accounting choices to alter earnings(see for example Healy (1985), Jones (1991). I use total accruals to total assets to proxy for the extent to which cash underlies reported earnings, and expect higher positive accruals(less cash) to be associated with a higher likelihood of earnings manipulation

Beneish Formula

(Net Inc before xor Items{t} - Cash from Op{t}) / Total Assets{t}

Our Formula

(NetIncBXorTTM - OperCashFlttm) / AstTotQ

NOTE: If OperCashFl during preliminary reporting is N/A , the whole formula excludes the latest period

Related Factors:

BeneishMScore MScoreAQI MScoreDEPAMI MScoreDEPI MScoreDSRI MScoreGMI MScoreLVGI MScoreSGAI MScoreSGAI MScoreTATA