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HCP Inc (NYSE:HCP)
Beneish M-Score
-2.64 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

HCP Inc has a M-score of -2.64 suggests that the company is not a manipulator.

HCP' s Beneish M-Score Range Over the Past 10 Years
Min: -3   Max: -0.71
Current: -2.64

-3
-0.71

During the past 13 years, the highest Beneish M-Score of HCP Inc was -0.71. The lowest was -3.00. And the median was -2.63.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of HCP Inc for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 1.1993+0.528 * 1.0946+0.404 * 0.8522+0.892 * 1.1227+0.115 * 1.0158
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0408+4.679 * -0.084-0.327 * 1.1282
=-2.64

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $49 Mil.
Revenue was 668.036 + 657.953 + 607.532 + 610.791 = $2,544 Mil.
Gross Profit was 495.549 + 484.438 + 471.19 + 478.76 = $1,930 Mil.
Total Current Assets was $1,225 Mil.
Total Assets was $21,450 Mil.
Property, Plant and Equipment(Net PPE) was $12,283 Mil.
Depreciation, Depletion and Amortization(DDA) was $509 Mil.
Selling, General & Admin. Expense(SGA) was $96 Mil.
Total Current Liabilities was $559 Mil.
Long-Term Debt was $11,069 Mil.
Net Income was -598.868 + 115.362 + 164.885 + -240.614 = $-559 Mil.
Non Operating Income was 2.651 + -0.974 + 11.116 + 7.988 = $21 Mil.
Cash Flow from Operations was 354.485 + 273.674 + 363.918 + 230.068 = $1,222 Mil.
Accounts Receivable was $36 Mil.
Revenue was 603.528 + 596.638 + 536.121 + 529.992 = $2,266 Mil.
Gross Profit was 473.098 + 497.039 + 457.254 + 454.285 = $1,882 Mil.
Total Current Assets was $1,176 Mil.
Total Assets was $21,331 Mil.
Property, Plant and Equipment(Net PPE) was $10,887 Mil.
Depreciation, Depletion and Amortization(DDA) was $459 Mil.
Selling, General & Admin. Expense(SGA) was $82 Mil.
Total Current Liabilities was $528 Mil.
Long-Term Debt was $9,721 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(48.929 / 2544.312) / (36.339 / 2266.279)
=0.01923074 / 0.01603465
=1.1993

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(484.438 / 2266.279) / (495.549 / 2544.312)
=0.83029318 / 0.75853001
=1.0946

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1224.788 + 12282.716) / 21449.849) / (1 - (1176.086 + 10886.887) / 21331.436)
=0.3702751 / 0.43449785
=0.8522

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=2544.312 / 2266.279
=1.1227

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(459.046 / (459.046 + 10886.887)) / (509.49 / (509.49 + 12282.716))
=0.04045908 / 0.03982816
=1.0158

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(96.022 / 2544.312) / (82.175 / 2266.279)
=0.03773987 / 0.03625988
=1.0408

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((11069.003 + 559.256) / 21449.849) / ((9721.269 + 528.345) / 21331.436)
=0.54211379 / 0.48049339
=1.1282

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-559.235 - 20.781 - 1222.145) / 21449.849
=-0.084

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

HCP Inc has a M-score of -2.64 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

HCP Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 10.8530.5931.29720.7310.5661.15360.72081.22471.1993
GMI 1.00541.03430.96920.9931.00940.95361.02380.99151.03331.0946
AQI 4.12780.6890.91051.11080.93631.73260.92471.06130.96030.8522
SGI 1.46651.69631.27090.99631.07951.36621.10951.1171.07921.1227
DEPI 1.19890.91460.87021.00751.00870.93311.12560.85110.94511.0158
SGAI 1.01090.85440.84781.06870.98010.84690.64191.34840.73891.0408
LVGI 0.87681.50490.8140.97720.76251.21830.98790.99071.06641.1282
TATA 0.00760.01-0.0125-0.0321-0.02-0.0114-0.0103-0.0098-0.0158-0.084
M-score -0.70-2.20-2.65-2.32-2.69-2.39-2.23-2.73-2.26-2.64

HCP Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.75540.72590.81560.91821.20241.22471.271.24071.27461.1993
GMI 0.98670.99270.99460.99771.01161.03331.05621.07951.10411.0946
AQI 0.92261.06130.99910.97051.02950.96030.96090.92280.89750.8522
SGI 1.13961.10911.08731.0711.05511.07921.10781.12881.13081.1227
DEPI 0.96650.85110.87790.91950.9370.94510.93591.0341.0471.0158
SGAI 1.23691.35791.3771.20370.68280.73890.7520.81881.11141.0408
LVGI 0.98570.99070.98750.98851.03221.06641.11571.16561.13291.1282
TATA -0.0129-0.0098-0.0096-0.0092-0.0085-0.0158-0.0393-0.04-0.046-0.084
M-score -2.72-2.74-2.69-2.59-2.23-2.26-2.31-2.34-2.37-2.64
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