Benford's Law in the Analysis of Inventories of Portuguese Companies

DOI: https://doi.org/10.34624/ijbi.v1i4.30282
Keywords: Benford Law, inventories, financial reporting, assets

Abstract

The article aims to check whether the financial data disclosed by companies comply with natural laws in terms of the resources used. We recognise the compliance of the distributions with the Benford distribution as the compliance of financial data with natural law. The fit of empirical distributions of the analysed variables in Portuguese companies will be presented in charts and measured using Mean Absolute Deviation (MAD). In the article, we analyse the inventory values of Portuguese companies in the years 2016 - 2020. The study results indicate that for one sector (Real Estate), there is no consistency with the Benford distribution. The study's preliminary results suggest that inventory values follow the natural distribution of digits, which was described by a mathematical formula by Benford. The non-conformity in the Real Estate sector requires a deeper analysis of the results, which will be continued further research.

Published
2022-12-23
How to Cite
Luty, P., & Costa, R. (2022). Benford’s Law in the Analysis of Inventories of Portuguese Companies. International Journal of Business Innovation, 1(4), e30282. https://doi.org/10.34624/ijbi.v1i4.30282
Issue
Volume 1 Issue 4 (2022)
Section
Accounting

Copyright (c) 2022 Piotr Luty, Rui Costa

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