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Wednesday, 26 November 2014

The Piotroski Score



The Piotroski Score

The 9 signals were chosen to measure profitability (signals 1, 2, 3 & 4), leverage/liquidity (signals 5, 6 & 7) and operating efficiency (signals 8 & 9).
Signals – score 1 if true
  1. Net Income is positive
  2. Operating cash flow is positive
  3. Return on assets is improving
  4. Operating cash flow exceeds net income
  5. Long term debt to assets ratio is improving
  6. Current ratio is improving
  7. Shares outstanding have not increased
  8. Gross margin is improving
  9. Sales to total assets ratio is improving

High scoring stocks of 8 or 9 points are great business to lead the recovery in stock prices.

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