Piotroski F-Score

# Piotroski F-Score — scoring rules

Source: Joseph Piotroski, "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers", *Journal of Accounting Research* (2000). Nine pass/fail signals of profitability, leverage/liquidity and operating efficiency, comparing the latest fiscal year with the one before.

Score = 100 x signals passed / 9 (each test is 11.1 points). "Passes all" = nine of nine. A signal whose inputs are missing for either year is `insufficient` and listed; the score is then the sum of the computed signals (status `partial`). Financials are not scored. Balance-sheet values are the facts closest to each fiscal year end (within 25 days).

| # | Signal (passes when) | Inputs |
|---|---|---|
| 1 | Return on assets > 0 (net income / year-end assets) | NetIncomeLoss, Assets |
| 2 | Operating cash flow > 0 | NetCashProvidedByOperatingActivities |
| 3 | Return on assets higher than the prior year | as 1 |
| 4 | Operating cash flow > net income (low accruals) | as 2 |
| 5 | Long-term debt / assets lower than the prior year | LongTermDebtNoncurrent, Assets |
| 6 | Current ratio higher than the prior year | AssetsCurrent, LiabilitiesCurrent |
| 7 | No new shares: latest point-in-time share count <= the count about a year earlier (+0.5% tolerance) | shares outstanding (XBRL instants and cover pages) |
| 8 | Operating margin higher than the prior year — a stand-in for Piotroski's gross margin, which the dataset does not carry | OperatingIncomeLoss, Revenues |
| 9 | Asset turnover (revenue / year-end assets) higher than the prior year | Revenues, Assets |

Deviations, stated: year-end rather than beginning-of-year assets are used for the return-on-assets and turnover ratios; signal 8 uses operating margin; signal 5 is insufficient for companies that tag no long-term debt (zero debt is never assumed).