Piotroski F-Score

The Piotroski F-Score is a discrete scoring system developed by accounting professor Joseph Piotroski in 2000. It assigns one point for each of nine financial tests that a company passes, producing a total score from 0 to 9.

The Nine Tests

Four tests evaluate profitability: positive net income, positive operating cash flow, rising return on assets compared to the prior year, and operating cash flow exceeding net income. Three tests cover leverage and liquidity: declining long-term debt ratio, improving current ratio, and no new share issuance. Two tests measure operating efficiency: improving gross margin and improving asset turnover.

Each test is binary — pass or fail, scored 1 or 0. A score of 8 or 9 signals strong financial health. A score of 0 to 2 signals significant weakness. Academic research has shown that high-scoring stocks tend to outperform low-scoring ones, particularly among value stocks.

Fair Price Index uses the Piotroski F-Score as a modifier within the FPI Rating. Scores of 7 or above add a bonus to the overall rating, while scores of 3 or below apply a penalty.