function calculatePiotroskiFScore() {
// Get current year inputs
var netIncomeCurrent = parseFloat(document.getElementById('netIncomeCurrent').value);
var totalAssetsCurrent = parseFloat(document.getElementById('totalAssetsCurrent').value);
var ocfCurrent = parseFloat(document.getElementById('ocfCurrent').value);
var longTermDebtCurrent = parseFloat(document.getElementById('longTermDebtCurrent').value);
var currentAssetsCurrent = parseFloat(document.getElementById('currentAssetsCurrent').value);
var currentLiabilitiesCurrent = parseFloat(document.getElementById('currentLiabilitiesCurrent').value);
var sharesOutstandingCurrent = parseFloat(document.getElementById('sharesOutstandingCurrent').value);
var grossProfitCurrent = parseFloat(document.getElementById('grossProfitCurrent').value);
var revenueCurrent = parseFloat(document.getElementById('revenueCurrent').value);
// Get previous year inputs
var netIncomePrevious = parseFloat(document.getElementById('netIncomePrevious').value);
var totalAssetsPrevious = parseFloat(document.getElementById('totalAssetsPrevious').value);
var longTermDebtPrevious = parseFloat(document.getElementById('longTermDebtPrevious').value);
var currentAssetsPrevious = parseFloat(document.getElementById('currentAssetsPrevious').value);
var currentLiabilitiesPrevious = parseFloat(document.getElementById('currentLiabilitiesPrevious').value);
var sharesOutstandingPrevious = parseFloat(document.getElementById('sharesOutstandingPrevious').value);
var grossProfitPrevious = parseFloat(document.getElementById('grossProfitPrevious').value);
var revenuePrevious = parseFloat(document.getElementById('revenuePrevious').value);
// Validate inputs
var inputs = [
netIncomeCurrent, totalAssetsCurrent, ocfCurrent, longTermDebtCurrent, currentAssetsCurrent, currentLiabilitiesCurrent, sharesOutstandingCurrent, grossProfitCurrent, revenueCurrent,
netIncomePrevious, totalAssetsPrevious, longTermDebtPrevious, currentAssetsPrevious, currentLiabilitiesPrevious, sharesOutstandingPrevious, grossProfitPrevious, revenuePrevious
];
for (var i = 0; i < inputs.length; i++) {
if (isNaN(inputs[i])) {
document.getElementById('result').style.display = 'block';
document.getElementById('result').innerHTML = 'Please enter valid numbers for all financial metrics.';
document.getElementById('scoreDetails').style.display = 'none';
return;
}
}
var fScore = 0;
var details = {};
// 1. Return on Assets (ROA) – Profitability
var roaCurrent = totalAssetsCurrent !== 0 ? netIncomeCurrent / totalAssetsCurrent : 0;
if (netIncomeCurrent > 0) {
fScore += 1;
details.roa = '1 point: Current Net Income is positive.';
} else {
details.roa = '0 points: Current Net Income is not positive.';
}
// 2. Operating Cash Flow (OCF) – Profitability
if (ocfCurrent > 0) {
fScore += 1;
details.ocf = '1 point: Current Operating Cash Flow is positive.';
} else {
details.ocf = '0 points: Current Operating Cash Flow is not positive.';
}
// 3. Change in ROA (ΔROA) – Profitability
var roaPrevious = totalAssetsPrevious !== 0 ? netIncomePrevious / totalAssetsPrevious : 0;
if (roaCurrent > roaPrevious) {
fScore += 1;
details.deltaRoa = '1 point: Current ROA (' + roaCurrent.toFixed(4) + ') is greater than Previous ROA (' + roaPrevious.toFixed(4) + ').';
} else {
details.deltaRoa = '0 points: Current ROA (' + roaCurrent.toFixed(4) + ') is not greater than Previous ROA (' + roaPrevious.toFixed(4) + ').';
}
// 4. Accruals (Quality of Earnings) – Profitability
// OCF > Net Income indicates higher quality earnings (less reliance on non-cash items)
if (ocfCurrent > netIncomeCurrent) {
fScore += 1;
details.accruals = '1 point: Current Operating Cash Flow is greater than Current Net Income.';
} else {
details.accruals = '0 points: Current Operating Cash Flow is not greater than Current Net Income.';
}
// 5. Change in Leverage (ΔLeverage) – Leverage, Liquidity, Source of Funds
// Lower or equal leverage is good
var leverageCurrent = totalAssetsCurrent !== 0 ? longTermDebtCurrent / totalAssetsCurrent : 0;
var leveragePrevious = totalAssetsPrevious !== 0 ? longTermDebtPrevious / totalAssetsPrevious : 0;
if (leverageCurrent 0 ? Infinity : 0);
var currentRatioPrevious = currentLiabilitiesPrevious !== 0 ? currentAssetsPrevious / currentLiabilitiesPrevious : (currentAssetsPrevious > 0 ? Infinity : 0);
if (currentRatioCurrent >= currentRatioPrevious) {
fScore += 1;
details.deltaCurrentRatio = '1 point: Current Current Ratio (' + currentRatioCurrent.toFixed(2) + ') is greater than or equal to Previous Current Ratio (' + currentRatioPrevious.toFixed(2) + ').';
} else {
details.deltaCurrentRatio = '0 points: Current Current Ratio (' + currentRatioCurrent.toFixed(2) + ') is less than Previous Current Ratio (' + currentRatioPrevious.toFixed(2) + ').';
}
// 7. Change in Shares Outstanding (ΔShares) – Leverage, Liquidity, Source of Funds
// Lower or equal shares outstanding (no dilution) is good
if (sharesOutstandingCurrent = grossMarginPrevious) {
fScore += 1;
details.deltaGrossMargin = '1 point: Current Gross Margin (' + (grossMarginCurrent * 100).toFixed(2) + '%) is greater than or equal to Previous Gross Margin (' + (grossMarginPrevious * 100).toFixed(2) + '%).';
} else {
details.deltaGrossMargin = '0 points: Current Gross Margin (' + (grossMarginCurrent * 100).toFixed(2) + '%) is less than Previous Gross Margin (' + (grossMarginPrevious * 100).toFixed(2) + '%).';
}
// 9. Change in Asset Turnover (ΔAsset Turnover) – Operating Efficiency
// Higher or equal asset turnover is good
var assetTurnoverCurrent = totalAssetsCurrent !== 0 ? revenueCurrent / totalAssetsCurrent : 0;
var assetTurnoverPrevious = totalAssetsPrevious !== 0 ? revenuePrevious / totalAssetsPrevious : 0;
if (assetTurnoverCurrent >= assetTurnoverPrevious) {
fScore += 1;
details.deltaAssetTurnover = '1 point: Current Asset Turnover (' + assetTurnoverCurrent.toFixed(2) + ') is greater than or equal to Previous Asset Turnover (' + assetTurnoverPrevious.toFixed(2) + ').';
} else {
details.deltaAssetTurnover = '0 points: Current Asset Turnover (' + assetTurnoverCurrent.toFixed(2) + ') is less than Previous Asset Turnover (' + assetTurnoverPrevious.toFixed(2) + ').';
}
// Display results
document.getElementById('result').style.display = 'block';
document.getElementById('result').innerHTML = 'Your Piotroski F-Score is: ' + fScore + ' out of 9.';
document.getElementById('scoreDetails').style.display = 'block';
document.getElementById('roaScoreDetail').innerHTML = '1. Positive ROA: ' + details.roa;
document.getElementById('ocfScoreDetail').innerHTML = '2. Positive OCF: ' + details.ocf;
document.getElementById('deltaRoaScoreDetail').innerHTML = '3. Increasing ROA: ' + details.deltaRoa;
document.getElementById('accrualsScoreDetail').innerHTML = '4. OCF > Net Income: ' + details.accruals;
document.getElementById('deltaLeverageScoreDetail').innerHTML = '5. Decreasing/Stable Leverage: ' + details.deltaLeverage;
document.getElementById('deltaCurrentRatioScoreDetail').innerHTML = '6. Increasing/Stable Current Ratio: ' + details.deltaCurrentRatio;
document.getElementById('deltaSharesScoreDetail').innerHTML = '7. Decreasing/Stable Shares Outstanding: ' + details.deltaShares;
document.getElementById('deltaGrossMarginScoreDetail').innerHTML = '8. Increasing/Stable Gross Margin: ' + details.deltaGrossMargin;
document.getElementById('deltaAssetTurnoverScoreDetail').innerHTML = '9. Increasing/Stable Asset Turnover: ' + details.deltaAssetTurnover;
}
Understanding the Piotroski F-Score
The Piotroski F-Score is a discrete score between 0 and 9 that reflects the financial strength of a company. Developed by Stanford accounting professor Joseph Piotroski, it's a popular tool used by investors to identify value stocks and avoid financially weak companies. The score is based on nine fundamental criteria, each earning a company one point if the condition is met, and zero points if not.
Why is the Piotroski F-Score Important?
This score helps investors filter out companies that might be in financial distress or are not performing efficiently. A high F-Score (typically 8 or 9) suggests a strong financial position, while a low score (0 to 2) indicates a weak financial standing, potentially signaling a company to avoid. It's particularly useful for identifying companies that are improving their financial health, which can be a strong indicator of future stock price appreciation.
The Nine Criteria of the Piotroski F-Score
The nine criteria are divided into three main categories:
1. Profitability (4 points possible)
Return on Assets (ROA): 1 point if ROA is positive in the current year. (Net Income / Total Assets)
Operating Cash Flow (OCF): 1 point if OCF is positive in the current year.
Change in ROA (ΔROA): 1 point if current ROA is greater than previous year's ROA.
Accruals: 1 point if OCF is greater than Net Income in the current year. This indicates higher quality earnings.
2. Leverage, Liquidity, and Source of Funds (3 points possible)
Change in Leverage (ΔLeverage): 1 point if the current year's long-term debt to assets ratio is less than or equal to the previous year's. (Long-Term Debt / Total Assets)
Change in Current Ratio (ΔCurrent Ratio): 1 point if the current year's current ratio is greater than or equal to the previous year's. (Current Assets / Current Liabilities)
Change in Shares Outstanding (ΔShares): 1 point if the number of shares outstanding is less than or equal to the previous year's. This indicates no dilution or share buybacks.
3. Operating Efficiency (2 points possible)
Change in Gross Margin (ΔGross Margin): 1 point if the current year's gross margin is greater than or equal to the previous year's. (Gross Profit / Revenue)
Change in Asset Turnover (ΔAsset Turnover): 1 point if the current year's asset turnover is greater than or equal to the previous year's. (Revenue / Total Assets)
Interpreting Your F-Score
Score of 8-9: Strong financial position. These companies are generally considered healthy and potentially good investments.
Score of 3-7: Mixed financial position. These companies might have some strengths and some weaknesses. Further analysis is recommended.
Score of 0-2: Weak financial position. These companies are often considered financially distressed and carry higher investment risk.
Limitations of the Piotroski F-Score
While powerful, the F-Score has limitations. It's based on historical financial data and doesn't account for future prospects, industry-specific factors, or qualitative aspects of a business. It's best used as a screening tool in conjunction with other fundamental and qualitative analysis.
How to Use This Calculator
To use the calculator, simply input the required financial metrics for the current and previous fiscal years. These figures can typically be found in a company's annual reports (10-K filings) or financial statements. The calculator will then compute the Piotroski F-Score and provide a breakdown of how each criterion contributed to the final score, helping you understand the underlying financial health of the company.
Example Calculation
Let's use the default values provided in the calculator as an example:
Current Year: Net Income = $15M, Total Assets = $100M, OCF = $20M, Long-Term Debt = $30M, Current Assets = $40M, Current Liabilities = $20M, Shares Outstanding = 10M, Gross Profit = $50M, Revenue = $100M.
Previous Year: Net Income = $10M, Total Assets = $90M, Long-Term Debt = $35M, Current Assets = $35M, Current Liabilities = $22M, Shares Outstanding = 10M, Gross Profit = $45M, Revenue = $95M.
Based on these inputs, the calculator would determine the following:
1. Positive ROA: Current Net Income ($15M) > 0. (1 point)
2. Positive OCF: Current OCF ($20M) > 0. (1 point)