A high Piotroski F-Score means a company is in a strong financial position. A low Piotroski F-Score means a company is likely to go bankrupt.

A Piotroski F-Score can be helpful in deciding if an undervalued stock is worth buying.

The Piotroski F-Score is calculated from nine fundamental indicators. These nine components are each given a pass (1) or fail (0). The sum of these parts results in the F-Score. For each criteria that a company meets, it’s F-Score is increased by 1.

Profitability:
– Positive Net Income – 1
– Positive Operating Cash Flow – 1
– Higher ROA than Previous Period – 1
– CFO > NI – 1

Leverage:
– Decline in of Long Term Debt – 1
– Higher Current Ratio than Previous Period -1
– Less Dilution (# of Shares Outstanding) than Previous Period – 1

Operating Efficiency:
– Higher Gross Margin than Previous Period
– Higher Asset Turnover than Previous Period

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