The Piotroski F-score is a measure of the financial strength of a company. It is preferable to not simply call it "F-score" except in a context that makes it clear that Piotroski's measure is what is meant, as the same term is used in statistics to refer to a measure of of the accuracy of a test.

## Comparison to alternatives

Compared to Altman's Z-score, the F-score tests more inputs but does not weight them: with the Z-score a very good or bad performance has a greater impact, whereas with the F-score only whether a number is above or below zero matters. The Z-score also uses only five variables against the F-score's nine.

Both are easily automated for screening, and both rely on data from the financial statements.

Neither is a substitute for fundamental analysis, and is therefore best used for screening prior to thorough analysis, except where a purely mechanical strategy is being implemented.

## Calculation of Piotroski's F-Score

The F-score is the sum the scores for each of nine tests. Each test scores one for a pass and zero for a fail. The tests are:

Profitability related

- Net profit is positive
- Operating cash flow is positive
*net profit*÷*total assets at beginning of year*, minus the same number for the previous year is positive.- operating cash flow is greater than net profit

Capital structure and debt service

- Long term debt ÷ by average assets has not increased
- The Current ratio has increased (the change is more then zero, so even a negligible increase passes the test!)
- no raising of ordinary (common) equity over the previous year: this test is passed if the company did not issues any ordinary shares.

Efficiency

- Gross margin has improved over the previous year.
- Asset turnover has increased.

For thorough explanation see Piotroski's original paper.