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Piotroski F-score
Also called: F-score, Piotroski score
A 0–9 score of financial health built from nine pass/fail tests of profitability, balance-sheet strength and efficiency, comparing the last two fiscal years.
Explanation
Accounting professor Joseph Piotroski published the F-score in 2000 to separate stronger from weaker companies among cheap, high book-to-market stocks. Each test passed scores one point.
Profitability (4 points): positive return on assets, positive operating cash flow, a higher return on assets than last year, and operating cash flow above net income, meaning earnings backed by cash. Leverage and liquidity (3): less long-term debt relative to assets, a higher current ratio and no new shares issued. Operating efficiency (2): a higher gross margin and a higher asset turnover.
Scores of 8 or 9 are usually read as strong and 0 to 2 as weak. It is a blunt instrument: it ignores valuation and says little about young companies without revenue.
Why it matters
The F-score is a quick check of whether results are improving and backed by cash, and one of its nine tests is simply whether the company sold new shares.
How Equity Dictionary measures it
The Outlook tab’s quality scores compute the nine signals from the last two fiscal years of XBRL data and show which pass.
Related terms
- Altman Z-score: A formula that combines balance-sheet and income ratios to estimate how close a company is to financial distress.
- Free cash flow (FCF): Operating cash flow minus capital expenditures: the cash a business generates, or consumes, after paying to maintain and grow its assets.
- Dilution: The shrinking of each existing shareholder’s ownership stake when a company issues new shares.
- SIC code: The four-digit Standard Industrial Classification code the SEC assigns to each registrant to describe its main line of business.
Plain-English summary for research; not legal or investment advice.