what is a good piotroski f-score

A score of 8 or 9 is considered strong and points to a financially improving company, while a score of 0 to 2 is weak and flags deterioration across profitability, leverage or efficiency. Scores in the middle are ambiguous. Piotroski’s own research found that buying high-scoring value stocks and avoiding low-scoring ones improved returns markedly, so the score is used both to confirm a promising idea and to weed out value traps that look cheap only because the business is falling apart.

what does the piotroski score measure

The nine tests fall into three groups. Profitability checks positive net income, positive operating cash flow, a rising return on assets, and cash flow exceeding net income. Leverage and liquidity checks falling long-term debt, a rising current ratio, and no new share dilution. Operating efficiency checks a rising gross margin and a rising asset turnover. Each pass scores one point, so the score rewards a company that is getting more profitable, less indebted and more efficient all at once, using year-on-year changes rather than absolute levels.

how is the piotroski f-score used to pick stocks

It is typically used as a second filter after a cheapness screen: first find statistically cheap stocks, then apply the F-score to keep only those whose fundamentals are strengthening. A cheap stock with a high F-score is a candidate; a cheap stock with a low F-score is often a value trap to avoid. Used this way it does not pick winners on its own, but it tilts a value portfolio toward improving businesses and away from the ones whose low price reflects genuine and worsening problems.

What is the Piotroski F-score and what is a good score

A stock can look cheap for two opposite reasons: the market is wrong, or the business is genuinely falling apart. Telling those apart is the whole game in value investing, and the Piotroski F-score is one of the cleanest tools for it — a nine-point checklist, drawn entirely from the statements, that scores whether a company is fundamentally improving or quietly rotting.

Nine yes/no tests, one score

Joseph Piotroski’s score awards one point for each of nine tests a company passes, grouped into three themes. Every test is a year-on-year improvement or a simple health check, so the score rewards a business getting better on several fronts at once rather than one that is merely large or profitable today.

Group	Tests (1 point each)
Profitability	Positive net income · positive operating cash flow · rising ROA · cash flow > net income
Leverage & liquidity	Falling long-term debt · rising current ratio · no new shares issued
Operating efficiency	Rising gross margin · rising asset turnover

Loading interactive demo…

Enter two years of figures and see each of the nine tests pass or fail, grouped the same way as the table above.

Worked example

Reading two 8/9 versus 2/9 outcomes

Two cheap stocks

Stock AProfit up, debt down, margins risingF-score 8/9

Stock BLosses, rising debt, dilutionF-score 2/9

Both lookLow P/E, low P/BStatistically cheap

The differenceSame cheapness, opposite qualityA is improving, B is failing

Two equally cheap stocks can have opposite trajectories. The F-score turns that hidden difference into a number: A’s 8 says the business is strengthening as it sits at a low price — the classic value setup — while B’s 2 says the low price is cheap for a reason. The score does not value the stock; it screens the quality behind the price.

Check yourself

You have two statistically cheap stocks: one scores 8/9 on the Piotroski F-score, the other 2/9. How should the scores shape your shortlist?

Simple bhasha mein

Nau sawaal, sasta ya sad-gala

Sasta stock do wajah se hota hai — market galat, ya business sach mein sad raha. Piotroski F-score (0 se 9) yahi chhaanta hai — nau haan/na test: profit badha? cash > profit? karza ghata? margin badha? Har haan = 1 point. 8-9 matlab sudhar raha, 0-2 matlab bigad raha. Sasta + high score = mauka; sasta + low score = value trap. Is site ka live scanner Indian stocks ka F-score nikaal deta hai — pehle check karo.

What to remember

The Piotroski F-score rates financial strength 0–9 from nine statement-based tests.
The tests span profitability, leverage and liquidity, and operating efficiency.
8–9 is strong and improving; 0–2 is weak and deteriorating.
It measures year-on-year direction, not absolute size or current profit.
Best used as a second filter on cheap stocks to separate bargains from value traps.

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Common questions

Short, direct answers to what people ask about this topic.

what is the piotroski f-score: The Piotroski F-score is a nine-point scoring system that rates a company’s financial strength from 0 to 9 using signals drawn entirely from its financial statements. Created by accounting professor Joseph Piotroski, it awards one point for each of nine tests across profitability, leverage and liquidity, and operating efficiency that the company passes. The idea is to separate fundamentally improving businesses from deteriorating ones, and it was originally designed to be applied to cheap, unglamorous value stocks where quality varies enormously.
what is a good piotroski f-score: A score of 8 or 9 is considered strong and points to a financially improving company, while a score of 0 to 2 is weak and flags deterioration across profitability, leverage or efficiency. Scores in the middle are ambiguous. Piotroski’s own research found that buying high-scoring value stocks and avoiding low-scoring ones improved returns markedly, so the score is used both to confirm a promising idea and to weed out value traps that look cheap only because the business is falling apart.
what does the piotroski score measure: The nine tests fall into three groups. Profitability checks positive net income, positive operating cash flow, a rising return on assets, and cash flow exceeding net income. Leverage and liquidity checks falling long-term debt, a rising current ratio, and no new share dilution. Operating efficiency checks a rising gross margin and a rising asset turnover. Each pass scores one point, so the score rewards a company that is getting more profitable, less indebted and more efficient all at once, using year-on-year changes rather than absolute levels.
how is the piotroski f-score used to pick stocks: It is typically used as a second filter after a cheapness screen: first find statistically cheap stocks, then apply the F-score to keep only those whose fundamentals are strengthening. A cheap stock with a high F-score is a candidate; a cheap stock with a low F-score is often a value trap to avoid. Used this way it does not pick winners on its own, but it tilts a value portfolio toward improving businesses and away from the ones whose low price reflects genuine and worsening problems.

The Piotroski F-score: nine tests of quality

Nine yes/no tests, one score

Common questions