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HCP Inc (NYSE:HCP)
Beneish M-Score
-2.31 (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 -2.31 suggests that the company is not a manipulator.

HCP' s 10-Year Beneish M-Score Range
Min: -3.15   Max: -0.63
Current: -2.31

-3.15
-0.63

During the past 13 years, the highest Beneish M-Score of HCP Inc was -0.63. The lowest was -3.15. And the median was -2.57.


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 * 1.27+0.528 * 1.0562+0.404 * 0.9609+0.892 * 1.1078+0.115 * 0.9359
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7477+4.679 * -0.0393-0.327 * 1.1157
=-2.31

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $40 Mil.
Revenue was 610.791 + 603.528 + 596.638 + 536.121 = $2,347 Mil.
Gross Profit was 478.76 + 473.098 + 497.039 + 457.254 = $1,906 Mil.
Total Current Assets was $1,250 Mil.
Total Assets was $21,024 Mil.
Property, Plant and Equipment(Net PPE) was $10,837 Mil.
Depreciation, Depletion and Amortization(DDA) was $466 Mil.
Selling, General & Admin. Expense(SGA) was $86 Mil.
Total Current Liabilities was $402 Mil.
Long-Term Debt was $9,987 Mil.
Net Income was -240.614 + 196.583 + 247.654 + 218.885 = $423 Mil.
Non Operating Income was 7.988 + 5.066 + 3.111 + 0.709 = $17 Mil.
Cash Flow from Operations was 230.068 + 365.599 + 275.317 + 360.524 = $1,232 Mil.
Accounts Receivable was $29 Mil.
Revenue was 529.992 + 530.297 + 546.157 + 512.239 = $2,119 Mil.
Gross Profit was 454.285 + 454.005 + 470.74 + 438.352 = $1,817 Mil.
Total Current Assets was $480 Mil.
Total Assets was $19,859 Mil.
Property, Plant and Equipment(Net PPE) was $10,593 Mil.
Depreciation, Depletion and Amortization(DDA) was $425 Mil.
Selling, General & Admin. Expense(SGA) was $103 Mil.
Total Current Liabilities was $344 Mil.
Long-Term Debt was $8,450 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)
=(40.153 / 2347.078) / (28.539 / 2118.685)
=0.01710765 / 0.01347015
=1.27

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)
=(473.098 / 2118.685) / (478.76 / 2347.078)
=0.85778773 / 0.8121379
=1.0562

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 - (1249.88 + 10837.025) / 21024.442) / (1 - (479.745 + 10593.355) / 19858.678)
=0.42510222 / 0.44240498
=0.9609

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
=2347.078 / 2118.685
=1.1078

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))
=(425.109 / (425.109 + 10593.355)) / (465.97 / (465.97 + 10837.025))
=0.03858151 / 0.04122536
=0.9359

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)
=(85.554 / 2347.078) / (103.286 / 2118.685)
=0.03645128 / 0.04875005
=0.7477

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)
=((9986.763 + 401.646) / 21024.442) / ((8450.347 + 344.143) / 19858.678)
=0.49411104 / 0.44285375
=1.1157

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
=(422.508 - 16.874 - 1231.508) / 21024.442
=-0.0393

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 -2.31 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 10.8530.5931.29720.7310.56011.16560.72081.2247
GMI 1.00541.03430.96920.9931.00940.95311.02440.99151.0333
AQI 4.12780.6890.91051.11080.93631.73260.92471.06131.0564
SGI 1.46651.69631.27090.99631.07951.38051.09811.1171.0792
DEPI 1.19890.91460.87021.00751.00870.93311.12560.85110.9451
SGAI 1.01090.85440.84781.06870.98011.92940.3271.16190.7389
LVGI 0.87681.50490.8140.97720.76251.21830.98790.99071.0684
TATA 0.00760.01-0.0125-0.0321-0.02-0.0114-0.0103-0.0098-0.0158
M-score -0.70-2.20-2.65-2.32-2.69-2.57-2.17-2.70-2.22

HCP Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.16131.24811.1620.76270.72590.81560.91821.20241.22471.27
GMI 1.02361.0190.99930.98750.99270.99460.99771.01161.03331.0562
AQI 0.92470.98450.97620.92261.06130.99910.97051.02951.05640.9609
SGI 1.10211.05761.10231.12861.10911.08731.0711.05511.07921.1078
DEPI 1.12561.06681.01750.96650.85110.87790.91950.9370.94510.9359
SGAI 0.32580.34490.40640.51281.17011.18791.13310.72370.73450.7477
LVGI 0.98790.95821.01620.98570.99070.98750.98851.03221.06841.1157
TATA -0.0103-0.0105-0.0129-0.0129-0.0098-0.0096-0.0092-0.0085-0.0158-0.0393
M-score -2.17-2.11-2.21-2.60-2.70-2.66-2.58-2.24-2.22-2.31
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