Piotroski F-Score
The Piotroski F-Score tells an investor how many signs of improving profitability, funding and efficiency a company shows against a year earlier.
How it is calculated
One point for each of nine tests against a year earlier: positive return on assets, positive operating cash flow, rising return on assets, cash flow above net income, falling long-term leverage, rising current ratio, no new shares issued, rising gross margin, and rising asset turnover
- Unit
- Raw number
- Periods
- TTM, Annual
- Source
- Calculated by stockrow from the inputs below
Reading Piotroski F-Score
How to read it
The score is a count: one point for each of nine tests the company passes. Two check that it is profitable — ROA above zero and Operating Cash Flow above zero — and one checks that cash flow beats Net Income Alloted to Shareholders, a sign earnings are backed by cash. The rest compare with a year earlier: ROA up, Total Debt To Total Assets down, Current Ratio up, Shares (Basic, Weighted) down, Gross Margin up and Asset Turnover up. A higher score means more of these boxes are ticked; stockrow shows it on a trailing twelve month basis.
What is typical
Established, steadily improving companies tend to score higher, while young companies that are still loss-making, raising money or building out their balance sheets tend to score lower. Some tests suit certain businesses poorly — banks, for instance, have no meaningful current ratio. Compare the score with the median for the company’s sector.
Pitfalls
Each test is pass or fail, so a tiny improvement earns the same point as a large one, and a company can gain or lose several points on small changes. The score rewards change against a year earlier, so a strong business that simply held steady can score lower than a weak one that recovered a little. It is a summary of these inputs and says nothing about valuation.