The Piotroski Score, developed by Joseph Piotroski in the year 2000, is a financial metric used to assess the strength and financial health of a company. It is also referred to as the Piotroski F-Score.
This scoring system categorizes companies into different levels of financial performance based on a scale from 1 to 9.
A Piotroski Score of 7, 8, or 9 indicates that the company is financially strong, while a score of 1, 2, or 3 suggests that the company is facing financial struggles.
Companies with scores between 4 and 6 are considered average in terms of financial performance.
To calculate the Piotroski Score, nine different criteria are used. Each criterion awards one point to the company if it meets specific conditions. These criteria cover aspects such as profitability, leverage, liquidity, and funding, among others.
For instance, the company’s profitability, operating strength, and ability to consistently grow are essential factors in determining the Piotroski Score. By evaluating these criteria, investors can gain insights into the company’s financial standing and make more informed investment decisions.
In summary, the Piotroski Score serves as a valuable tool for investors, providing a comprehensive assessment of a company’s financial health based on various fundamental factors. Understanding the criteria and how they contribute to the overall score allows investors to make educated choices in their investment strategies.
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