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

Warning Sign:

Beneish M-Score 7.05 higher than -2.22, which implies that it might have manipulated its financial results.

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 7.05 signals that the company is a manipulator.

HCP' s 10-Year Beneish M-Score Range
Min: -3.49   Max: 21.39
Current: 7.05

-3.49
21.39

During the past 13 years, the highest Beneish M-Score of HCP Inc was 21.39. The lowest was -3.49. And the median was -2.53.


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 * 11.3794+0.528 * 0.9935+0.404 * 0.9991+0.892 * 1.0914+0.115 * 0.8779
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2608+4.679 * -0.0096-0.327 * 0.9875
=7.05

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $400 Mil.
Revenue was 529.992 + 536.586 + 543.958 + 516.284 = $2,127 Mil.
Gross Profit was 454.285 + 463.286 + 467.389 + 441.47 = $1,826 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 $110 Mil.
Total Current Liabilities was $344 Mil.
Long-Term Debt was $8,450 Mil.
Net Income was 259.111 + 293.095 + 233.756 + 213.401 = $999 Mil.
Non Operating Income was 1.93 + 1.329 + 1.584 + 3.24 = $8 Mil.
Cash Flow from Operations was 247.181 + 305.307 + 272.078 + 357.252 = $1,182 Mil.
Accounts Receivable was $32 Mil.
Revenue was 511.186 + 508.971 + 468.066 + 460.415 = $1,949 Mil.
Gross Profit was 438.5 + 438.289 + 395.413 + 390.339 = $1,663 Mil.
Total Current Assets was $117 Mil.
Total Assets was $19,733 Mil.
Property, Plant and Equipment(Net PPE) was $10,878 Mil.
Depreciation, Depletion and Amortization(DDA) was $381 Mil.
Selling, General & Admin. Expense(SGA) was $80 Mil.
Total Current Liabilities was $303 Mil.
Long-Term Debt was $8,546 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)
=(399.711 / 2126.82) / (32.183 / 1948.638)
=0.18793833 / 0.01651564
=11.3794

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)
=(463.286 / 1948.638) / (454.285 / 2126.82)
=0.85318104 / 0.85876097
=0.9935

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 - (479.745 + 10593.355) / 19858.678) / (1 - (117.405 + 10877.68) / 19732.731)
=0.44240498 / 0.44279963
=0.9991

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
=2126.82 / 1948.638
=1.0914

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))
=(381.34 / (381.34 + 10877.68)) / (425.109 / (425.109 + 10593.355))
=0.03386973 / 0.03858151
=0.8779

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)
=(110.043 / 2126.82) / (79.968 / 1948.638)
=0.05174063 / 0.04103789
=1.2608

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)
=((8450.347 + 344.143) / 19858.678) / ((8545.59 + 303.449) / 19732.731)
=0.44285375 / 0.44844472
=0.9875

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
=(999.363 - 8.083 - 1181.818) / 19858.678
=-0.0096

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 7.05 signals that the company is likely to 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 10.8530.5931.29720.7310.560110.58741.1357
GMI 1.00541.03430.96920.9931.00940.95311.02440.9915
AQI 4.12780.6890.91051.11080.93631.73260.92471.0185
SGI 1.46651.69631.27090.99631.07951.38051.09811.117
DEPI 1.19890.91460.87021.00751.00870.93311.12560.8511
SGAI 1.01090.85440.84781.06870.98011.92940.3271.2317
LVGI 0.87681.50490.8140.97720.76251.21830.98790.9907
TATA 0.00760.01-0.0125-0.0321-0.02-0.0114-0.0103-0.0098
M-score -0.70-2.20-2.65-2.32-2.69-2.576.50-2.35

HCP Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.55830.5580.86251.104310.54811.24811.159711.65381.139411.3794
GMI 0.95260.96021.00061.02311.02361.0190.99950.98850.99160.9935
AQI 1.73261.9851.0411.04680.92470.98450.97620.92261.01850.9991
SGI 1.38511.44341.24071.16051.10211.05761.10451.12961.11341.0914
DEPI 0.93310.90570.94210.97261.12561.06681.01750.96650.85110.8779
SGAI 1.9231.89771.70081.81510.32580.34490.40560.51281.23641.2608
LVGI 1.21831.01250.96440.99490.98790.95821.01620.98570.99070.9875
TATA -0.0114-0.0057-0.0076-0.0109-0.0103-0.0105-0.0129-0.0129-0.0098-0.0096
M-score -2.56-2.31-2.53-2.406.46-2.11-2.217.42-2.357.05
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