Question
Which of the following is NOT true about Beneishs M-Score? a. Firms with increasing gross margins are expected to be less likely to manipulate earnings,
Which of the following is NOT true about Beneishs M-Score?
a. Firms with increasing gross margins are expected to be less likely to manipulate earnings, thus increasing gross margins descreses the M-Score.
b. Lower depreciation rates increase the M-Score because this can be evidence a company is increasing life of depreciable assets to increase earnings.
c. Increased account receivable relative to sales increases the M-Score because increasing accounts receivable can be evidence of sales being overstated.
d. A lower stock price increases the M-Score because when the stock price is low, managers have more incentives to manipulate earnings to increase the stock price.
e. All of the above are true.
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