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GuruFocus has detected 9 Warning Signs with HCP Inc $HCP.
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HCP Inc (NYSE:HCP)
Beneish M-Score
-3.13 (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 -3.13 suggests that the company is not a manipulator.

HCP' s Beneish M-Score Range Over the Past 10 Years
Min: -3.72   Max: -0.2
Current: -3.13

-3.72
-0.2

During the past 13 years, the highest Beneish M-Score of HCP Inc was -0.20. The lowest was -3.72. 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 * 0.6509+0.528 * 1.0159+0.404 * 0.5872+0.892 * 1.0701+0.115 * 0.6958
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9726+4.679 * -0.0381-0.327 * 1.0708
=-3.13

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

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $32 Mil.
Revenue was 492.168 + 172.238 + 654.27 + 662.176 = $1,981 Mil.
Gross Profit was 333.087 + -20.334 + 465.523 + 482.051 = $1,260 Mil.
Total Current Assets was $856 Mil.
Total Assets was $14,856 Mil.
Property, Plant and Equipment(Net PPE) was $10,634 Mil.
Depreciation, Depletion and Amortization(DDA) was $568 Mil.
Selling, General & Admin. Expense(SGA) was $101 Mil.
Total Current Liabilities was $486 Mil.
Long-Term Debt was $8,141 Mil.
Net Income was 461.145 + 58.661 + 151.25 + 301.717 = $973 Mil.
Non Operating Income was 350.135 + -19.911 + -19.037 + 89.107 = $400 Mil.
Cash Flow from Operations was 193.129 + 215.499 + 331.72 + 398.295 = $1,139 Mil.
Accounts Receivable was $45 Mil.
Revenue was 520.457 + 65.585 + 657.499 + 607.532 = $1,851 Mil.
Gross Profit was 344.5 + -103.206 + 483.984 + 471.19 = $1,196 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 $441 Mil.
Selling, General & Admin. Expense(SGA) was $97 Mil.
Total Current Liabilities was $563 Mil.
Long-Term Debt was $10,936 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)
=(31.5 / 1980.852) / (45.224 / 1851.073)
=0.01590225 / 0.02443124
=0.6509

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)
=(1196.468 / 1851.073) / (1260.327 / 1980.852)
=0.64636457 / 0.63625501
=1.0159

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 - (856.42 + 10633.704) / 14855.868) / (1 - (955.065 + 12065.135) / 21199.927)
=0.2265599 / 0.38583751
=0.5872

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
=1980.852 / 1851.073
=1.0701

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))
=(440.955 / (440.955 + 12065.135)) / (567.632 / (567.632 + 10633.704))
=0.03525922 / 0.05067538
=0.6958

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)
=(100.59 / 1980.852) / (96.643 / 1851.073)
=0.05078118 / 0.05220918
=0.9726

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)
=((8141.452 + 486.469) / 14855.868) / ((10935.944 + 562.8) / 21199.927)
=0.58077529 / 0.54239545
=1.0708

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
=(972.773 - 400.294 - 1138.643) / 14855.868
=-0.0381

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 -3.13 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

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.86020.59661.2960.73220.56411.14940.72591.69561.13520.891
GMI 1.03780.9680.9931.00970.95321.02310.99271.11851.11911.0829
AQI 0.6890.91051.11080.93631.73260.92471.06130.96030.98290.6317
SGI 1.68221.26340.99721.07781.37091.11361.10910.77951.18611.0349
DEPI 0.91460.87021.00751.00870.93311.12560.85111.13161.00190.7011
SGAI 0.86140.85741.06210.98160.84410.63961.35791.0180.98951.0428
LVGI 1.50490.8140.97720.76251.21830.98790.99071.06641.12761.1426
TATA -0.006-0.0015-0.02630.0078-0.0056-0.0091-0.0055-0.0124-0.0788-0.0393
M-score -2.28-2.61-2.29-2.56-2.36-2.22-2.72-2.06-2.54-2.93

HCP Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.69561.73551.67731.70861.13521.04511.06120.80460.8910.6509
GMI 1.11851.15111.1851.22661.11911.15291.14161.1081.08291.0159
AQI 0.96030.96090.92280.89750.98290.90761.03491.03560.63170.5872
SGI 0.77950.81070.8350.84351.18611.07771.06521.02841.03491.0701
DEPI 1.13161.11711.23131.2411.00190.97960.84020.86040.70110.6958
SGAI 1.0181.02271.1021.48330.98951.04710.91621.08591.04280.9726
LVGI 1.06641.11571.16561.13291.12761.09771.0251.0371.14261.0708
TATA -0.0124-0.0351-0.0352-0.041-0.0788-0.0652-0.066-0.0668-0.0393-0.0381
M-score -2.06-2.10-2.15-2.18-2.54-2.67-2.60-2.92-2.93-3.13
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