{"id":14414,"date":"2026-05-27T07:42:30","date_gmt":"2026-05-27T07:42:30","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/glossary\/piotroski-f-score\/"},"modified":"2026-05-27T07:42:30","modified_gmt":"2026-05-27T07:42:30","slug":"piotroski-f-score","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/piotroski-f-score\/","title":{"rendered":"Piotroski F-Score"},"content":{"rendered":"

The Piotroski F-Score<\/a> is a financial scoring system developed by accounting professor Joseph Piotroski in 2000 to identify financially strong companies among low price-to-book value stocks<\/a>. It uses nine binary criteria across profitability, leverage<\/a>, and efficiency to assign each company a score from 0 to 9.<\/p>\n

What Is the Piotroski F-Score?<\/h2>\n

The F-Score assigns 1 point for each criterion met and 0 otherwise:<\/p>\n

**Profitability signals (4 criteria):**
\n– F1: Positive return on assets<\/a> (ROA > 0)
\n– F2: Positive operating cash flow<\/a>
\n– F3: ROA increasing year over year
\n– F4: Cash flow<\/a> from operations > Net income<\/a> (accruals are low)<\/p>\n

**Leverage and liquidity<\/a> signals (3 criteria):**
\n– F5: Debt ratio decreasing (leverage improved)
\n– F6: Current ratio<\/a> improving (liquidity better)
\n– F7: No new equity shares<\/a> issued (no dilution)<\/p>\n

**Operating efficiency signals (2 criteria):**
\n– F8: Gross margin<\/a> improving
\n– F9: Asset turnover ratio<\/a> improving<\/p>\n

Interpreting the F-Score<\/h2>\n

| F-Score | Interpretation |
\n|———|—————|
\n| 8-9 | Strong; financially improving company |
\n| 5-7 | Average; watch for trends |
\n| 0-2 | Weak; financially deteriorating |<\/p>\n

Piotroski’s Original Research<\/h2>\n

Piotroski found that buying high F-Score value stocks<\/a> (8-9) and shorting low F-Score stocks (0-2) from the universe of low price-to-book stocks generated a mean annual return of 23% in his US study. The F-Score was designed to filter out financially deteriorating “value traps.”<\/p>\n

Practical Example<\/h2>\n

A value investor screens for Indian small-cap stocks<\/a> trading<\/a> below book value<\/a>. She finds 40 candidates. After applying the F-Score, only 8 score 8 or above. She investigates these 8 further for qualitative factors. The F-Score filtering reduced time spent on financially weakening companies.<\/p>\n

Key Takeaways<\/h2>\n

– Piotroski F-Score scores companies 0-9 on nine profitability, leverage, and efficiency criteria
\n– Higher scores (8-9) indicate financially improving companies; lower scores (0-2) signal deterioration
\n– Designed to identify quality within the universe of low price-to-book value stocks
\n– Each criterion is binary (yes\/no); only companies genuinely improving across multiple dimensions score high
\n– Useful as a quantitative screen, but always combine with qualitative analysis and industry context<\/p>\n","protected":false},"excerpt":{"rendered":"

The Piotroski F-Score is a financial scoring system developed by accounting professor Joseph Piotroski in 2000 to identify financially strong companies among low price-to-book value stocks. It uses nine binary criteria across profitability, leverage, and efficiency to assign each company a score from 0 to 9. What Is the Piotroski F-Score? The F-Score assigns 1 […]<\/p>\n","protected":false},"author":3,"featured_media":0,"menu_order":0,"template":"","meta":{"_uag_custom_page_level_css":"","footnotes":""},"class_list":["post-14414","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"1536x1536":false,"2048x2048":false,"web-stories-poster-portrait":false,"web-stories-publisher-logo":false,"web-stories-thumbnail":false},"uagb_author_info":{"display_name":"Team Lemonn","author_link":"https:\/\/lemonn.co.in\/blog\/author\/ashu\/"},"uagb_comment_info":0,"uagb_excerpt":"The Piotroski F-Score is a financial scoring system developed by accounting professor Joseph Piotroski in 2000 to identify financially strong companies among low price-to-book value stocks. It uses nine binary criteria across profitability, leverage, and efficiency to assign each company a score from 0 to 9. What Is the Piotroski F-Score? The F-Score assigns 1…","_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/14414","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/3"}],"version-history":[{"count":0,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/14414\/revisions"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=14414"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}