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Financial health & leverage

Piotroski F-Score

A 0-to-9 scorecard of a company's fundamental strength based on nine pass/fail financial tests.

Part of the Financial Health & Risk course · Lesson 8 of 13

What it is

The Piotroski F-Score, created by accounting professor Joseph Piotroski in 2000, rates a company's financial strength on a scale of 0 to 9. It awards one point for each of nine yes/no tests covering profitability, leverage and liquidity, and operating efficiency. A higher score points to stronger, improving fundamentals.

Why it matters

It is a simple, transparent way to separate financially improving companies from deteriorating ones, and it was originally designed to find healthy firms among cheap value stocks. Scores of 8 or 9 indicate strong fundamentals, while 0 to 2 signals weakness. Because it rewards year-over-year improvement, a high score reflects positive momentum in the fundamentals, not just a strong snapshot.

How it's calculated

It sums nine binary tests across three areas, awarding one point each: profitability (positive net income, positive operating cash flow, rising return on assets, and operating cash flow exceeding net income), leverage/liquidity (falling long-term debt ratio, rising current ratio, and no new shares issued), and efficiency (rising gross margin and rising asset turnover). The total ranges from 0 to 9.

How Quintarthai uses it

Piotroski-style fundamental quality signals feed Quinn's bull/bear and QuinnScore analysis on a company's deep-analysis page, and quality metrics are available across the screener and company pages.

Cross-border note. Several inputs (gross margin, operating cash flow, asset values) can shift modestly under IFRS versus US GAAP, so compare F-Scores between Canadian and US companies with that accounting difference in mind.

FAQ

What is a good Piotroski F-Score?
A score of 8 or 9 reflects strong, improving fundamentals, while 0 to 2 signals weak or deteriorating ones. The score is most useful as a relative filter rather than a standalone buy or sell trigger.
What does the F-Score measure?
It measures fundamental financial strength across profitability, leverage and liquidity, and operating efficiency, with extra weight on year-over-year improvement. It was designed to help identify financially solid companies, particularly among value stocks.
Related terms
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