Earnings quality · updated October 21, 2026
What is the Piotroski F-score and how is it calculated
The Piotroski F-score adds up nine simple tests on profit, debt and efficiency: each test passed earns one point, so the score runs from 0 to 9. Professor Joseph Piotroski created it to separate cheap companies that are improving from those that are cheap for good reason.
The Piotroski F-score formula
- Profit (4 tests)
- Positive net profit; positive cash from operations; ROA higher than last year; cash from operations above profit.
- Debt and liquidity (3 tests)
- Long-term debt went down; the current ratio went up; no new shares were issued.
- Efficiency (2 tests)
- Gross margin went up; asset turnover (sales ÷ assets) went up.
Worked example
A company has positive profit and cash flow, rising ROA, cash above profit, falling debt, no new shares and a higher gross margin, but its liquidity and asset turnover went down.
A score of 7 shows a company improving on most fronts.
How to read the Piotroski F-score
The score compares this year with last year, so it shows direction, not just level. It works best for low-valuation companies.
When the Piotroski F-score can fool you
Banks and insurers: the liquidity and gross margin tests do not fit their model. An unusual year: a very weak previous year makes many tests easy to pass.
Related terms
Questions about the Piotroski F-score
What is a good Piotroski score?
7, 8 or 9. The original study showed that cheap stocks with a high score earned much more than cheap stocks with a low score.
These explanations are for information only. They are not a recommendation to buy or sell.
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