Piotroski F Score Calculator
This Piotroski F score calculator will help you assess the strength of a company’s financial state. The Piotroski F score uses nine factors taken from a firm’s financial statementsThree Financial StatementsThe three financial statements are the income statement, the balance sheet, and the statement of cash flows. These three core statements are intricately. Using these factors, it calculates a measure of the strength of a firm’s financial position.
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Piotroski F Score Factors
CFI’s Piotroski F score calculator can be used to assess a company’s financial strength by looking at nine factors. A score of either 0 or 1 is rewarded for each of these factors, depending on whether it has been fulfilled or not. The higher the score, the more reliable a stock is to invest in. These factors are categorized into three different sources of financial strength that analysts like to look at.
Profitability
ROA: Return on assetsReturn on Assets & ROA FormulaROA Formula. Return on Assets (ROA) is a type of return on investment (ROI) metric that measures the profitability of a business in relation to its total assets. This ratio indicates how well a company is performing by comparing the profit (net income) it's generating to the capital it's invested in assets.. Net IncomeNet IncomeNet Income is a key line item, not only in the income statement, but in all three core financial statements. While it is arrived at through the income statement, the net profit is also used in both the balance sheet and the cash flow statement. divided by year beginning total assets. F score is 1 if ROA is positive, 0 otherwise.
CFO: Operating cash flowOperating Cash FlowOperating Cash Flow (OCF) is the amount of cash generated by the regular operating activities of a business in a specific time period. The operating cash flow formula is net income (form the bottom of the income statement), plus any non-cash items, plus adjustments for changes in working capital divided by year beginning total assets. F score is 1 if CFO is positive, 0 otherwise.
∆ROA: Change in ROA from the prior year. If ∆ROA > 0, F score is 1. Otherwise, F score is 0.
ACCRUAL: CFO compared to ROA. If CFO > ROA, F score is 1. Otherwise, F score is 0.
Leverage, Liquidity, and Source of Funds
∆LEVER: Change in long-term debtLong Term DebtLong Term Debt (LTD) is any amount of outstanding debt a company holds that has a maturity of 12 months or longer. It is classified as a non-current liability on the company’s balance sheet. The time to maturity for LTD can range anywhere from 12 months to 30+ years and the types of debt can include bonds, mortgages/average total assets ratio. If the ratio compared to the prior year is lower, F score is 1, 0 otherwise.
∆LIQUID: Change in current ratioCurrent Ratio FormulaThe Current Ratio formula is = Current Assets / Current Liabilities. The current ratio, also known as the working capital ratio, measures the capability of a business to meet its short-term obligations that are due within a year. The ratio considers the weight of total current assets versus total current liabilities. It indicates the financial health of a company. If the current ratio increases from the prior year, F score is 1, 0 otherwise.
EQ_OFFER: Total common equityCommon StockCommon stock is a type of security that represents ownership of equity in a company. There are other terms – such as common share, ordinary share, or voting share – that are equivalent to common stock. between years. If common equity increases compared to prior year, F score is 1, 0 otherwise.
Operating Efficiency
∆MARGIN: Change in gross margin ratioGross Margin RatioThe Gross Margin Ratio, also known as the gross profit margin ratio, is a profitability ratio that compares the gross profit of a company to its revenue.. If the current year’s ratio minus prior year’s ratio > 0, F Score is 1, 0 otherwise.
∆TURN: Change in asset turnover ratioAsset Turnover RatioThe asset turnover ratio, also known as the total asset turnover ratio, measures the efficiency with which a company uses its assets to produce sales. A company with a high asset turnover ratio operates more efficiently as compared to competitors with a lower ratio. (revenue/beginning year total assets). If current year’s ratio minus prior years > 0, F score is 1, 0 otherwise.
CFI’s Piotroski F score calculator uses all of these factors to evaluate a company. Check out our template to conduct your own analysis on a company’s financial status!
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