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HCP Inc (NYSE:HCP)
Beneish M-Score
-2.70 (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 -2.70 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: -2.7

-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 -2.43.


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 * 1.0269+0.528 * 1.0917+0.404 * 0.9076+0.892 * 1.0968+0.115 * 0.9688
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0251+4.679 * -0.0651-0.327 * 1.0977
=-2.70

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $45 Mil.
Revenue was 640.782 + 668.036 + 657.953 + 607.532 = $2,574 Mil.
Gross Profit was 463.827 + 495.549 + 484.438 + 471.19 = $1,915 Mil.
Total Current Assets was $955 Mil.
Total Assets was $21,200 Mil.
Property, Plant and Equipment(Net PPE) was $12,065 Mil.
Depreciation, Depletion and Amortization(DDA) was $536 Mil.
Selling, General & Admin. Expense(SGA) was $97 Mil.
Total Current Liabilities was $563 Mil.
Long-Term Debt was $10,936 Mil.
Net Income was 116.119 + -598.868 + 115.362 + 164.885 = $-203 Mil.
Non Operating Income was -16.807 + -20.484 + -20.816 + -24.829 = $-83 Mil.
Cash Flow from Operations was 268.617 + 354.485 + 273.674 + 363.918 = $1,261 Mil.
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.



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)
=(45.224 / 2574.303) / (40.153 / 2347.078)
=0.01756747 / 0.01710765
=1.0269

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)
=(1906.151 / 2347.078) / (1915.004 / 2574.303)
=0.8121379 / 0.74389223
=1.0917

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 - (955.065 + 12065.135) / 21199.927) / (1 - (1249.88 + 10837.025) / 21024.442)
=0.38583751 / 0.42510222
=0.9076

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
=2574.303 / 2347.078
=1.0968

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))
=(465.97 / (465.97 + 10837.025)) / (536.2 / (536.2 + 12065.135))
=0.04122536 / 0.04255105
=0.9688

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)
=(96.748 / 2574.303) / (86.049 / 2347.078)
=0.03758221 / 0.03666218
=1.0251

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)
=((10935.944 + 562.8) / 21199.927) / ((9986.763 + 401.646) / 21024.442)
=0.54239545 / 0.49411104
=1.0977

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
=(-202.502 - -82.936 - 1260.694) / 21199.927
=-0.0651

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 -2.70 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 10.91170.72191.14580.72740.56251.16190.72871.22471.1993
GMI 1.02391.05650.99740.96771.00820.95421.02560.99141.03331.0946
AQI 4.12780.6890.91051.11080.93631.73260.92471.06130.96030.8522
SGI 1.29711.5871.04411.12791.08481.37471.10161.10481.07921.1227
DEPI 19.63550.04880.95121.00751.00870.93311.12560.85110.94511.0158
SGAI 1.13880.94351.0222.11380.42430.84220.75011.24440.69711.0408
LVGI 0.87681.50490.8140.97720.76251.21830.98790.99071.06641.1282
TATA 0.00830.01-0.0101-0.0221-0.0079-0.00560.0052-0.0055-0.0123-0.0788
M-score 1.26-2.35-2.73-2.49-2.54-2.35-2.17-2.70-2.23-2.61

HCP Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.72590.81560.91821.20241.22471.271.24071.27461.19931.0269
GMI 0.99270.99460.99771.01161.03331.05621.07951.10411.09461.0917
AQI 1.06130.99910.97051.02950.96030.96090.92280.89750.85220.9076
SGI 1.10911.08731.0711.05511.07921.10781.12881.13081.12271.0968
DEPI 0.85110.87790.91950.9370.94510.93591.0341.0471.01580.9688
SGAI 1.35791.3771.20370.68280.73890.7520.81881.11141.04081.0251
LVGI 0.99070.98750.98851.03221.06641.11571.16561.13291.12821.0977
TATA -0.0055-0.005-0.0046-0.0052-0.0123-0.035-0.0351-0.0409-0.0788-0.0651
M-score -2.72-2.67-2.57-2.21-2.24-2.29-2.32-2.35-2.61-2.70
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