Piotroski F-Score
View All TermsHow is the Piotroski or F-Score calculated?
Profitability
1. Return on assets (ROA)
Net income before extraordinary items for the year divided by total assets at the beginning of the year.
Score 1 if positive, 0 if negative
2. Cash flow return on assets (CFROA)
Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.
Score 1 if positive, 0 if negative
3. Change in return on assets
Compare this year™s return on assets (1) to last year™s return on assets.
Score 1 if it™s higher, 0 if it™s lower
4. Quality of earnings (accrual)
Compare Cash flow return on assets (2) to return on assets (1)
Score 1 if CFROA>ROA, 0 if CFROA
Funding
5. Change in gearing or leverage
Compare this year™s gearing (long-term debt divided by average total assets) to last year™s gearing.
Score 1 if gearing is lower, 0 if it™s higher.
6. Change in working capital (liquidity)
Compare this year™s current ratio (current assets divided by current liabilities) to last year™s current ratio.
Score 1 if this year™s current ratio is higher, 0 if it™s lower
7. Change in shares in issue
Compare the number of shares in issue this year, to the number in issue last year.
Score 1 if there is the same number of shares in issue this year, or fewer. Score 0 if there are more shares in issue.
Efficiency
8. Change in gross margin
Compare this year™s gross margin (gross profit divided by sales) to last year™s.
Score 1 if this year™s gross margin is higher, 0 if it™s lower
9. Change in asset turnover
Compare this year™s asset turnover (total sales divided by total assets at the beginning of the year) to last year™s asset turnover ratio.
Score 1 if this year™s asset turnover ratio is higher, 0 if it™s lower
Evaluation
Piotroski or F-Score = 1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9
Good or high score = 8 or 9
Bad or low score = 0 or 1
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