Forensic Scores
What is Piotroski F-Score?
A nine-point checklist of financial strength: profitability, cash generation, leverage, liquidity, share issuance and operating efficiency, each scored against the year before.
How it is calculated
One point for each test passed: positive net income, positive operating cash flow, return on assets up, operating cash flow above net income, long-term debt to assets down, current ratio up, no new shares issued, gross margin up, asset turnover up.
How to read it
Scores of 7 to 9 mark strong and improving businesses; 0 to 3 mark weak or deteriorating ones. It was built to sort cheap stocks, so read it together with valuation and the trend of the score over several years.
Keep in mind
Shown for annual reports and trailing twelve months, and only when every test can be evaluated. Banks and brokers report no gross margin or current ratio, so they carry no score. Share issuance is checked on split-adjusted counts.
Where the numbers come from
Scrutar computes Piotroski F-Score from the figures each company reports to the SEC in its annual and quarterly filings, using the XBRL data attached to those filings.