Fundamental Equity Analysis & Due Diligence Lab

Piotroski F-Score Calculator & Fundamental Strength Lab

Evaluate corporate fundamental financial health using Stanford's famous 9-point Piotroski F-Score. Audit profitability, cash flow accrual quality, capital structure leverage, liquidity, and operating efficiency.

Launch F-Score Lab DuPont Analysis Lab Altman Z-Score Lab Financial Ratio Lab
Stanford Model
Piotroski (2000)
9 binary accounting tests designed to separate winning value compounders from deteriorating value traps.

Corporate Financial Scenarios

Select an institutional financial profile to prefill current and prior year accounting statements.

1. Financial Statement Inputs ($ Millions)

Current Year (t)
Prior Year (t-1)
$
$
$
$
$
$
$
$
$
$
$
$
M shs
M shs
$
$
$
$

2. Composite Scorecard & 9 Criteria

Composite Piotroski F-Score
9 / 9
High Fundamental Strength (Top Quintile)
Indicates robust cash generation, balance sheet deleveraging, and expanding profit margins.
Profitability
4 / 4
Max 4 pts
Leverage/Liquidity
3 / 3
Max 3 pts
Operating Efficiency
2 / 2
Max 2 pts

Category 1: Profitability Signals (4 Points)

1. Positive Net Income (NI > 0)
Net Income: $120.00M
+1 Point (Pass)
2. Positive Operating Cash Flow (CFO > 0)
Operating Cash Flow: $155.00M
+1 Point (Pass)
3. Higher Return on Assets (ΔROA > 0)
ROA: 11.4% vs Prior 9.5%
+1 Point (Pass)
4. Quality of Earnings (CFO > Net Income)
CFO ($155.00M) > Net Income ($120.00M)
+1 Point (Pass)

Category 2: Leverage, Liquidity & Dilution (3 Points)

5. Deleveraging: Long-Term Debt Stable or Reduced (ΔLTD ≤ 0)
Debt: $200.00M vs Prior $220.00M
+1 Point (Pass)
6. Liquidity: Higher Current Ratio (ΔCR > 0)
Current Ratio: 2.50x vs Prior 2.00x
+1 Point (Pass)
7. No Dilution: Common Shares Issued ≤ Prior Year
Shares: 50.00M vs Prior 50.00M
+1 Point (Pass)

Category 3: Operating Efficiency (2 Points)

8. Higher Gross Margin (ΔGross Margin > 0)
Gross Margin: 45.0% vs Prior 43.2%
+1 Point (Pass)
9. Higher Asset Turnover (ΔAsset Turnover > 0)
Asset Turnover: 1.05x vs Prior 0.95x
+1 Point (Pass)

Subscore Sensitivity Testing & Scenario Matrices

Analyze how adjustments to operational cash flow, earnings accruals, and debt commitments shift F-Score subcomponents.

Matrix 1: Profitability Points (Net Income vs. Operating Cash Flow)

Simulates Category 1 score (max 4 pts) under various earnings and cash flow levels.

Matrix 2: Balance Sheet Points (Current Assets vs. Long-Term Debt)

Simulates leverage and liquidity subscore (max 2 pts) under varying debt and asset levels.

Understanding the Piotroski F-Score Framework

Why Value Investors Rely on the F-Score

In his seminal 2000 paper Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers, Joseph Piotroski demonstrated that buying high F-score (8-9) value stocks while shorting low F-score (0-2) stocks generated an annual return premium of 23% over a 20-year period.

The Power of Accrual Quality (Criterion 4)

Criterion 4 tests whether Cash Flow from Operations exceeds Net Income ($CFO > NI$). When Net Income is higher than operating cash flow, it signals aggressive revenue recognition, uncollected receivables, or unsold inventory accruals—a classic early warning of earnings manipulation or impending write-downs.

Frequently Asked Questions

The Piotroski F-Score is a 9-point discrete scoring system developed by Stanford accounting professor Joseph Piotroski in 2000. It evaluates the fundamental financial health of public companies across profitability, balance sheet leverage/liquidity, and operating efficiency to identify high-quality value investments and eliminate deteriorating value traps.

The 9 criteria award +1 point each: 1. Positive Net Income (NI > 0); 2. Positive Operating Cash Flow (CFO > 0); 3. Increasing Return on Assets (ΔROA > 0); 4. Quality of Earnings where Cash Flow exceeds Net Income (CFO > NI); 5. Decreasing Long-Term Debt (ΔLTD ≤ 0); 6. Increasing Current Ratio (ΔCR > 0); 7. No New Share Dilution (Shares_t ≤ Shares_t-1); 8. Increasing Gross Margin (ΔGM > 0); and 9. Increasing Asset Turnover (ΔAT > 0).

An F-Score of 8 or 9 is considered exceptionally strong fundamental quality, indicating robust operational execution and financial strength. Scores of 5 to 7 represent moderate or average stability. Scores from 0 to 4 indicate severe financial deterioration, solvency strain, or aggressive accounting accruals, signaling high risk of underperformance or bankruptcy.

The Altman Z-Score is an econometric credit model designed specifically to forecast 2-year bankruptcy probabilities using weighted financial ratios. The Piotroski F-Score is a discrete binary ranking model designed to separate high-quality fundamental compounders from financially distressed value traps among low price-to-book value stocks.

Yes. You can export the complete financial line items (current and prior year), individual 9-point criteria pass/fail ratings, profitability, leverage, and efficiency sub-scores, and sensitivity matrices as a UTF-8 CSV spreadsheet with formula injection defense.
Profitability

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Simulation Hub

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