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Air Products & Chemicals Inc (NYSE:APD)
Piotroski F-Score
5 (As of Today)

The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Air Products & Chemicals Inc has an F-score of 5 indicating the company's financial situation is typical for a stable company.

APD' s 10-Year Piotroski F-Score Range
Min: 3   Max: 8
Current: 5

3
8

During the past 13 years, the highest Piotroski F-Score of Air Products & Chemicals Inc was 8. The lowest was 3. And the median was 6.


Definition

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Net Income was 283.5 + 314 + 104 + 324.6 = $1,026 Mil.
Cash Flow from Operations was 478.5 + 559.3 + 602.4 + 486.6 = $2,127 Mil.
Revenue was 2581.9 + 2634.6 + 2677 + 2560.8 = $10,454 Mil.
Gross Profit was 664.3 + 715.9 + 744.6 + 729.8 = $2,855 Mil.
Average Total Assets from the begining of this year (Dec13)
to the end of this year (Dec14) was
(17915.2 + 17963 + 18316.2 + 17779.1 + 17635.4) / 5 = $17921.78 Mil.
Total Assets at the begining of this year (Dec13) was $17,915 Mil.
Long-Term Debt was $4,751 Mil.
Total Current Assets was $3,137 Mil.
Total Current Liabilities was $3,002 Mil.
Net Income was 290.4 + 288.4 + 137.1 + 290.2 = $1,006 Mil.

Revenue was 2484.2 + 2547.3 + 2586.5 + 2545.5 = $10,164 Mil.
Gross Profit was 670.6 + 671.8 + 703.6 + 679.6 = $2,726 Mil.
Average Total Assets from the begining of last year (Dec12)
to the end of last year (Dec13) was
(17393.1 + 17221.2 + 17491.3 + 17850.1 + 17915.2) / 5 = $17574.18 Mil.
Total Assets at the begining of last year (Dec12) was $17,393 Mil.
Long-Term Debt was $5,021 Mil.
Total Current Assets was $3,330 Mil.
Total Current Liabilities was $3,145 Mil.

Profitability

Question 1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Air Products & Chemicals Inc's current net income (TTM) was 1,026. ==> Positive ==> Score 1.

Question 2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Air Products & Chemicals Inc's current cash flow from operations (TTM) was 2,127. ==> Positive ==> Score 1.

Question 3. Change in Return on Assets

Compare this year’s return on assets (1) to last year’s return on assets.

Score 1 if it’s higher, 0 if it’s lower.

ROA (This Year)=Net Income (TTM)/Total Assets at the Beginning of This Year (Dec13)
=1026.1/17915.2
=0.05727539

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=1006.1/17393.1
=0.05784478

Air Products & Chemicals Inc's return on assets of this year was 0.05727539. Air Products & Chemicals Inc's return on assets of last year was 0.05784478. ==> Last year is higher ==> Score 0.

Question 4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA <= ROA.

Air Products & Chemicals Inc's current net income (TTM) was 1,026. Air Products & Chemicals Inc's current cash flow from operations (TTM) was 2,127. ==> 2,127 > 1,026 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Dec14)=Long-Term Debt/Average Total Assets from Dec13 to Dec14
=4751.3/17921.78
=0.26511318

Gearing (Last Year: Dec13)=Long-Term Debt/Average Total Assets from Dec12 to Dec13
=5020.8/17574.18
=0.28569185

Air Products & Chemicals Inc's gearing of this year was 0.26511318. Air Products & Chemicals Inc's gearing of last year was 0.28569185. ==> This year is lower or equal to last year. ==> Score 1.

Question 6. Change in Working Capital (Liquidity)

Compare this year’s current ratio (current assets divided by current liabilities) to last year’s current ratio.

Score 1 if this year'’s current ratio is higher, 0 if it’s lower

Current Ratio (This Year: Dec14)=Total Current Assets/Total Current Liabilities
=3137.2/3001.9
=1.04507145

Current Ratio (Last Year: Dec13)=Total Current Assets/Total Current Liabilities
=3330.1/3145.2
=1.05878799

Air Products & Chemicals Inc's current ratio of this year was 1.04507145. Air Products & Chemicals Inc's current ratio of last year was 1.05878799. ==> Last year's current ratio is higher ==> Score 0.

Question 7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 0 if there is larger number of shares in issue this year, 1 otherwise.

Air Products & Chemicals Inc's number of shares in issue this year was 216.6. Air Products & Chemicals Inc's number of shares in issue last year was 214.3. ==> There is larger number of shares in issue this year. ==> Score 0.

Efficiency

Question 8. Change in Gross Margin

Compare this year’s gross margin (gross profit divided by sales) to last year’s.

Score 1 if this year’s gross margin is higher, 0 if it’s lower.

Gross Margin (This Year: TTM)=Gross Profit/Revenue
=2854.6/10454.3
=0.27305511

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2725.6/10163.5
=0.26817533

Air Products & Chemicals Inc's gross margin of this year was 0.27305511. Air Products & Chemicals Inc's gross margin of last year was 0.26817533. ==> This year's gross margin is higher. ==> Score 1.

Question 9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by total assets at the beginning of the year) to last year’s asset turnover ratio.

Score 1 if this year’s asset turnover ratio is higher, 0 if it’s lower

Asset Turnover (This Year)=Revenue (TTM)/Total Assets at the Beginning of This Year (Dec13)
=10454.3/17915.2
=0.58354358

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Dec12)
=10163.5/17393.1
=0.58434092

Air Products & Chemicals Inc's asset turnover of this year was 0.58354358. Air Products & Chemicals Inc's asset turnover of last year was 0.58434092. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+0+1+1+0+0+1+0
=5

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Air Products & Chemicals Inc has an F-score of 5 indicating the company's financial situation is typical for a stable company.


Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Related Terms

Net Income, Cash Flow from Operations, Revenue, Gross Profit, Total Assets, Long-Term Debt, Total Current Assets, Total Current Liabilities


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Air Products & Chemicals Inc Annual Data

Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14
Question 1 1111111111
Question 2 1111111111
Question 3 1010011000
Question 4 1111111111
Question 5 1000010011
Question 6 0011011001
Question 7 0111100110
Question 8 0010110101
Question 9 1101011000
F-score 6576586556

Air Products & Chemicals Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
Question 1 1111111111
Question 2 1111111111
Question 3 0000000000
Question 4 1111111111
Question 5 0000111111
Question 6 0000001110
Question 7 1111100000
Question 8 0110010111
Question 9 0001000000
F-score 4555555665
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