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GuruFocus has detected 8 Warning Signs with HCP Inc $HCP.
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HCP Inc (NYSE:HCP)
Beneish M-Score
-2.93 (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 -2.93 suggests that the company is not a manipulator.

HCP' s Beneish M-Score Range Over the Past 10 Years
Min: -3.3   Max: -0.63
Current: -2.93

-3.3
-0.63

During the past 13 years, the highest Beneish M-Score of HCP Inc was -0.63. The lowest was -3.30. And the median was -2.47.


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 * 0.7811+0.528 * 1.0587+0.404 * 1.0356+0.892 * 1.0594+0.115 * 0.8535
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0506+4.679 * -0.0667-0.327 * 1.037
=-2.93

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $41 Mil.
Revenue was 654.27 + 662.176 + 640.782 + 669.408 = $2,627 Mil.
Gross Profit was 465.523 + 482.051 + 463.827 + 496.921 = $1,908 Mil.
Total Current Assets was $246 Mil.
Total Assets was $21,189 Mil.
Property, Plant and Equipment(Net PPE) was $12,101 Mil.
Depreciation, Depletion and Amortization(DDA) was $565 Mil.
Selling, General & Admin. Expense(SGA) was $105 Mil.
Total Current Liabilities was $1,995 Mil.
Long-Term Debt was $9,549 Mil.
Net Income was 151.25 + 301.717 + 116.119 + -598.868 = $-30 Mil.
Non Operating Income was -19.037 + 89.107 + -16.807 + -21.856 = $31 Mil.
Cash Flow from Operations was 331.72 + 398.295 + 268.617 + 354.485 = $1,353 Mil.
Accounts Receivable was $50 Mil.
Revenue was 657.499 + 607.532 + 610.791 + 603.528 = $2,479 Mil.
Gross Profit was 483.984 + 471.19 + 478.76 + 473.098 = $1,907 Mil.
Total Current Assets was $1,002 Mil.
Total Assets was $22,193 Mil.
Property, Plant and Equipment(Net PPE) was $12,249 Mil.
Depreciation, Depletion and Amortization(DDA) was $485 Mil.
Selling, General & Admin. Expense(SGA) was $94 Mil.
Total Current Liabilities was $514 Mil.
Long-Term Debt was $11,145 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)
=(41.371 / 2626.636) / (49.994 / 2479.35)
=0.01575056 / 0.02016416
=0.7811

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)
=(1907.032 / 2479.35) / (1908.322 / 2626.636)
=0.76916611 / 0.72652701
=1.0587

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 - (245.989 + 12101.452) / 21188.545) / (1 - (1001.794 + 12249.349) / 22192.973)
=0.41725867 / 0.40291267
=1.0356

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
=2626.636 / 2479.35
=1.0594

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))
=(484.818 / (484.818 + 12249.349)) / (565.03 / (565.03 + 12101.452))
=0.03807222 / 0.04460828
=0.8535

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)
=(104.949 / 2626.636) / (94.293 / 2479.35)
=0.03995567 / 0.03803134
=1.0506

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)
=((9548.503 + 1995.471) / 21188.545) / ((11144.88 + 514.403) / 22192.973)
=0.54482146 / 0.52535922
=1.037

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
=(-29.782 - 31.407 - 1353.117) / 21188.545
=-0.0667

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 -2.93 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 local exchange's 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 0.00760.01-0.0014-0.02190.0078-0.0056-0.0091-0.0055-0.0123-0.0788
M-score -0.70-2.20-2.60-2.27-2.56-2.36-2.22-2.71-2.24-2.61

HCP Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.91821.20241.22471.271.24071.27491.19891.02651.03960.7811
GMI 0.99771.01161.03331.05621.07951.10421.09451.09161.08361.0587
AQI 0.97051.02950.96030.96090.92280.89750.85220.90761.03491.0356
SGI 1.0711.05511.07921.10781.12881.13051.12311.09721.08741.0594
DEPI 0.91950.9370.94510.93591.0341.0471.01580.96880.8350.8535
SGAI 1.20370.68280.73890.7520.81881.11161.04041.02470.89461.0506
LVGI 0.98851.03221.06641.11571.16561.13291.12821.09771.0251.037
TATA -0.0046-0.0052-0.0123-0.035-0.0351-0.0409-0.0787-0.0651-0.0659-0.0667
M-score -2.57-2.21-2.24-2.29-2.32-2.35-2.61-2.70-2.62-2.93
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