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Piotroski F-Score Calculator

Enter this year's and last year's financials to compute the 9-point F-Score.

How it is calculated

The tool awards one point for each of nine yes/no tests and adds them up to a score from 0 to 9. Profitability: net income above 0; operating cash flow above 0; ROA higher than last year; operating cash flow greater than net income. Leverage and liquidity: long-term debt ratio lower than last year; current ratio higher; shares outstanding not higher than last year. Efficiency: gross margin higher; asset turnover higher. Each test compares only the two numbers you give, so ties score nothing except for shares, where equal counts as a pass. All 14 fields must be filled in (use 0 where needed), or no score is shown. Enter ROA and gross margin in the same unit both years.

Worked example

Net income 120 and operating cash flow 150: both positive, and 150 > 120, so 3 points. ROA rose from 5 to 6: 4 points. Debt ratio fell from 0.35 to 0.30: 5. Current ratio rose from 1.6 to 1.8: 6. Shares unchanged at 100: 7. Gross margin fell from 39 to 38: no point. Asset turnover fell from 0.85 to 0.8: no point. Total: 7 / 9, which is usually read as a financially strong, improving company.

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Common mistakes

  • Swapping this year and prior year in a pair. The tests check improvement, so reversing ROA or debt flips the point.
  • Entering a debt ratio where a higher number is better. The test gives a point when long-term debt falls; a rising ratio scores nothing.
  • Leaving a field empty because it seems unimportant. Every one of the 14 fields is required, otherwise there is no result.
  • Mixing definitions between years, such as ROA from one data provider and the prior year from another, which produces a false improvement.
  • Treating the score as a buy signal. It only counts 9 tests; it says nothing about price, industry or why a figure changed.

Sources

About this calculator

The Piotroski F-Score, developed by accounting professor Joseph Piotroski in 2000, scores a company from 0 to 9 by awarding one point for each of nine binary financial tests passed, grouped into three categories: profitability (positive net income, positive operating cash flow, improved return on assets, cash flow exceeding net income), leverage/liquidity (lower long-term debt, improved current ratio, no new share issuance), and operating efficiency (improved gross margin, improved asset turnover).

Value investors use the F-Score to screen out financially deteriorating companies from a pool of statistically cheap (low price-to-book) stocks, on the premise — supported by Piotroski's original research — that high-scoring, fundamentally improving companies within that cheap universe tend to outperform low-scoring ones.

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Comments (1)

  • Editorial team

    Each of the nine tests only asks whether a figure went up or down, so a gross margin that edged up by a hundredth of a point earns the same point as one that jumped five points. When two companies tie on score, go back to the size of each change. It also helps to take all 14 figures from the same filings, with the same definitions in both years. Which of the nine tests do you find the hardest to source cleanly?

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