Piotroski F-Score Calculator | 9 Signals Explained
💡 Key Tips
- Piotroski designed this for cheap stocks. The score is most powerful when applied to the bottom fifth by price-to-book — it separates genuinely broken businesses from temporarily unloved ones.
- 8 or 9 is strong, 5 to 7 is average, 0 to 3 is weak. The original 1998 study found high scorers beat low scorers by a wide margin over the following year.
- Signal 4 — operating cash flow exceeding net profit — is the single most useful line here. It is the fastest check on whether reported profits are real cash.
- Signal 7 flags equity dilution. A company issuing fresh shares while claiming to be healthy deserves a second look at why it needs the money.
- Run the score every year after annual results. A move from 4 to 8 is often more actionable than a static high score.
⚠️ Things To Watch
- A high F-Score on an expensive stock means little. The score measures fundamental improvement, not valuation — always pair it with a valuation check.
- Do not use this on banks, NBFCs or insurance companies. Current ratio and gross margin are not meaningful for lenders.
- Every signal is binary. A company whose ROA improved from 0.1% to 0.11% scores the same point as one that went from 2% to 12%.
- Cyclical companies swing scores wildly at the top and bottom of a cycle, which can be misleading in both directions.
- Restated accounts, mergers and demergers break year-on-year comparability. Check that both columns are on a like-for-like basis.
📋 Disclaimer
This calculator is provided for educational and informational purposes only. It does not constitute financial, investment, or trading advice. Trading and investing carry substantial risk of loss and are not suitable for every investor. Past performance is not indicative of future results. Always consult a qualified financial advisor and conduct your own due diligence before making any trading or investment decisions.
📐 The Nine Piotroski Signals
1. How the score is built
2. Signals 1 to 4 — Profitability
3. Signals 5 to 7 — Leverage, Liquidity and Dilution
4. Signals 8 and 9 — Operating Efficiency
The Piotroski F-Score rates a company’s financial strength from 0 to 9 using nine pass-or-fail tests across profitability, leverage and operating efficiency. This guide explains every signal and how to read the result. It is educational only — no buy, sell or hold advice.
What the Piotroski F-Score is
Joseph Piotroski published the F-Score in 1998 while at the University of Chicago. It runs nine pass-or-fail tests on a company’s accounts, awards one point for each pass, and produces a score from 0 to 9. There is no weighting and no judgement — each signal is simply true or false.
One detail is usually left out of explanations, and it matters. Piotroski designed the score specifically for cheap stocks, applying it to the bottom fifth of the market by price-to-book. Its purpose was to separate genuinely broken businesses from temporarily unloved ones. A high F-Score on an expensive stock tells you far less.
The nine signals in three groups
Four signals test profitability, three test the balance sheet, and two test operating efficiency.
| # | Signal | Passes when |
|---|---|---|
| 1 | Return on assets | ROA is positive |
| 2 | Operating cash flow | CFO is positive |
| 3 | Improving ROA | ROA is higher than last year |
| 4 | Accruals | CFO exceeds net profit |
| 5 | Leverage | Long-term debt ratio fell |
| 6 | Liquidity | Current ratio improved |
| 7 | Dilution | Share count did not rise |
| 8 | Gross margin | Margin expanded |
| 9 | Asset turnover | Turnover improved |
Signal 4 is the most useful single line in the checklist. If reported profit consistently exceeds the cash the business actually generates, earnings are being supported by accounting accruals rather than cash.
Reading the score properly
A score of 8 or 9 indicates strong fundamentals. Five to seven is middling. Zero to three is weak. Piotroski’s original study found that high scorers outperformed low scorers by a wide margin over the following year within the cheap-stock universe he tested.
The year-on-year change often carries more information than the level. A company moving from 4 to 8 is showing improvement across several dimensions at once, which is a different signal from one that has sat at 8 for years.
One quirk surprises people. A loss-making company can still score a point on signal 4, because the test is whether operating cash flow exceeds net profit. If a company reports a loss of ₹300 crore but burns only ₹150 crore of cash, that comparison passes — and it genuinely is the one positive in the picture.
Where the F-Score falls short
Every signal is binary, which is both the strength and the weakness. A company whose ROA improved from 0.10% to 0.11% earns the same point as one that went from 2% to 12%. The score cannot tell you the size of an improvement, only its direction.
It should not be used on banks, NBFCs or insurance companies, where the current ratio and gross margin are not meaningful measures. Cyclical businesses swing scores sharply at the top and bottom of a cycle, which misleads in both directions.
Comparability also matters. Restated accounts, mergers and demergers break the year-on-year comparison the score depends on, so check that both years are on a like-for-like basis before reading anything into the result.
Related tools: Altman Z-Score calculator · DuPont analysis calculator
Frequently asked questions
What is a good Piotroski F-Score?
A score of 8 or 9 indicates strong fundamentals across profitability, balance sheet and efficiency. Five to seven is middling and zero to three is weak. The score measures financial improvement, not valuation, so it is most informative when read alongside a separate valuation check.
Does a score of 9 mean the stock will rise?
No. The F-Score measures whether a company’s fundamentals improved over the past year. It says nothing about the price you would pay for the shares. A high score on an expensive stock and a high score on a cheap one are very different situations.
Why can a loss-making company score a point on the accruals test?
Signal 4 tests whether operating cash flow exceeds net profit. If a company reports a loss of 300 crore rupees but burns only 150 crore of cash, cash flow is indeed higher than reported profit, so the signal passes. Cash burn being smaller than the accounting loss is a genuine positive.
How is the F-Score different from the Altman Z-Score?
The Z-Score estimates distress and bankruptcy risk from balance-sheet ratios. The F-Score measures whether fundamentals improved over the last twelve months across nine specific tests. They answer different questions and are often used together.
Educational and informational content only. EquityTimer is not a SEBI-registered investment adviser and does not provide buy, sell or hold recommendations. Data may contain errors or delays; verify independently and consult a registered financial adviser before making any investment decision.