Course
Forensic Analysis
Three published detectors for weak books, distress and manipulated earnings.
Intermediate3 lessonsabout 16 minContent checked
The statements as evidence. Piotroski’s nine checks for improving fundamentals, Altman’s Z for distress risk, and Beneish’s M-Score for the fingerprints of manipulated earnings — three models that ask not whether a company is good, but whether its numbers can be believed.
The Detectors
- 1. The Piotroski F-ScoreNine pass-or-fail accounting tests that separate improving businesses from deteriorating ones — built for value stocks, where the cheap and the broken look alike.5 min
- 2. The Altman Z-ScoreA five-ratio bankruptcy model from 1968 that still works — provided you use the variant built for the kind of company you are pointing it at.5 min
- 3. The Beneish M-Score — detecting manipulated earningsEight ratios that together flag a higher-than-usual probability that reported earnings have been manipulated. It is a screening signal about accounting, not a fraud verdict.6 min