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Airgas Inc (NYSE:ARG)
Piotroski F-Score
4 (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

Airgas Inc has an F-score of 4 indicating the company's financial situation is typical for a stable company.

ARG' s 10-Year Piotroski F-Score Range
Min: 3   Max: 7
Current: 4

3
7

During the past 13 years, the highest Piotroski F-Score of Airgas Inc was 7. 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 (Jun15) TTM:Last Year (Jun14) TTM:
Net Income was 98.312 + 93.199 + 87.723 + 88.235 = $367 Mil.
Cash Flow from Operations was 144.946 + 172.766 + 203.353 + 223.743 = $745 Mil.
Revenue was 1357.755 + 1331.82 + 1301.723 + 1349.71 = $5,341 Mil.
Gross Profit was 757.221 + 742.887 + 718.721 + 752.544 = $2,971 Mil.
Average Total Assets from the begining of this year (Jun14)
to the end of this year (Jun15) was
(5872.084 + 5904.774 + 5989.981 + 5973.61 + 6054.777) / 5 = $5959.0452 Mil.
Total Assets at the begining of this year (Jun14) was $5,872 Mil.
Long-Term Debt was $1,525 Mil.
Total Current Assets was $1,403 Mil.
Total Current Liabilities was $1,468 Mil.
Net Income was 94.982 + 82.759 + 88.357 + 88.852 = $355 Mil.

Revenue was 1281.97 + 1242.846 + 1267.83 + 1313.587 = $5,106 Mil.
Gross Profit was 718.958 + 705.176 + 696.481 + 730.181 = $2,851 Mil.
Average Total Assets from the begining of last year (Jun13)
to the end of last year (Jun14) was
(5587.888 + 5626.449 + 5755.259 + 5793.314 + 5872.084) / 5 = $5726.9988 Mil.
Total Assets at the begining of last year (Jun13) was $5,588 Mil.
Long-Term Debt was $2,009 Mil.
Total Current Assets was $1,421 Mil.
Total Current Liabilities was $1,020 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.

Airgas Inc's current net income (TTM) was 367. ==> 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.

Airgas Inc's current cash flow from operations (TTM) was 745. ==> 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 (Jun14)
=367.469/5872.084
=0.06257898

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Jun13)
=354.95/5587.888
=0.06352132

Airgas Inc's return on assets of this year was 0.06257898. Airgas Inc's return on assets of last year was 0.06352132. ==> 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.

Airgas Inc's current net income (TTM) was 367. Airgas Inc's current cash flow from operations (TTM) was 745. ==> 745 > 367 ==> 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: Jun15)=Long-Term Debt/Average Total Assets from Jun14 to Jun15
=1525.442/5959.0452
=0.25598765

Gearing (Last Year: Jun14)=Long-Term Debt/Average Total Assets from Jun13 to Jun14
=2008.526/5726.9988
=0.35071179

Airgas Inc's gearing of this year was 0.25598765. Airgas Inc's gearing of last year was 0.35071179. ==> 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: Jun15)=Total Current Assets/Total Current Liabilities
=1403.327/1468.115
=0.95586994

Current Ratio (Last Year: Jun14)=Total Current Assets/Total Current Liabilities
=1421.131/1019.55
=1.39388063

Airgas Inc's current ratio of this year was 0.95586994. Airgas Inc's current ratio of last year was 1.39388063. ==> 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.

Airgas Inc's number of shares in issue this year was 76.1. Airgas Inc's number of shares in issue last year was 75.5. ==> 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
=2971.373/5341.008
=0.55633188

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=2850.796/5106.233
=0.55829728

Airgas Inc's gross margin of this year was 0.55633188. Airgas Inc's gross margin of last year was 0.55829728. ==> Last year's gross margin is higher ==> Score 0.

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 (Jun14)
=5341.008/5872.084
=0.9095592

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Jun13)
=5106.233/5587.888
=0.91380375

Airgas Inc's asset turnover of this year was 0.9095592. Airgas Inc's asset turnover of last year was 0.91380375. ==> 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+0+0
=4

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

Airgas Inc has an F-score of 4 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.

Airgas Inc Annual Data

Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15
Question 1 1111111111
Question 2 1111111111
Question 3 1110011101
Question 4 1111111111
Question 5 1011101011
Question 6 0101010101
Question 7 0001011110
Question 8 0111100110
Question 9 1100011001
F-score 6767577767

Airgas Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
Question 1 1111111111
Question 2 1111111111
Question 3 1000010110
Question 4 1111111111
Question 5 0011110111
Question 6 1100001110
Question 7 1111100000
Question 8 1111111000
Question 9 0000000110
F-score 7666665774
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