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Brown-Forman Corporation (NYSE:BF.B)
Piotroski F-Score
8 (As of Today)

Good Sign:

Piotroski F-Score of 8 is 8, indicating very healthy situation.

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

Brown-Forman Corporation has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.

BF.B' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 8

3
9

During the past 13 years, the highest Piotroski F-Score of Brown-Forman Corporation was 9. 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 (Jan14) TTM:Last Year (Jan13) TTM:
Net Income was 177 + 206 + 143 + 113 = $639 Mil.
Cash Flow from Operations was 189 + 108 + 93 + 170 = $560 Mil.
Revenue was 782 + 833 + 686 + 660 = $2,961 Mil.
Gross Profit was 532 + 576 + 477 + 460 = $2,045 Mil.
Total Assets at the begining of this year (Jan13) was $3,832 Mil.
Total Assets was $3,993 Mil.
Long-Term Debt was $997 Mil.
Total Current Assets was $2,103 Mil.
Total Current Liabilities was $604 Mil.
Net Income was 157 + 173 + 147 + 104.3 = $581 Mil.

Revenue was 747 + 777 + 666 + 602.4 = $2,792 Mil.
Gross Profit was 507 + 525 + 464 + 421.8 = $1,918 Mil.
Total Assets at the begining of last year (Jan12) was $3,676 Mil.
Total Assets was $3,832 Mil.
Long-Term Debt was $997 Mil.
Total Current Assets was $2,046 Mil.
Total Current Liabilities was $807 Mil.

Profitability

Q1. 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.

Brown-Forman Corporation's current net income was 639. ==> Positive ==> Score 1.

Q2. 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.

Brown-Forman Corporation's current cash flow from operations was 560. ==> Positive ==> Score 1.

Q3. 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/Total Assets at the beginning of this year (Jan13)
=639/3832.3
=0.1667406

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Jan12)
=581.3/3676.4
=0.15811664

Brown-Forman Corporation's return on assets of this year was 0.1667406. Brown-Forman Corporation's return on assets of last year was 0.15811664. ==> This year is higher. ==> Score 1.

Q4. 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.

Brown-Forman Corporation's current net income was 639. Brown-Forman Corporation's current cash flow from operations was 560. ==> 560 =< 639 ==> CFROA =< ROA ==> Score 0.

Funding

Q5. Change in Gearing or Leverage

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

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

Gearing (This Year)=Long-Term Debt/Total Assets
=997/3993
=0.24968695

Gearing (Last Year)=Long-Term Debt/Total Assets
=996.6/3832.3
=0.26005271

Brown-Forman Corporation's gearing of this year was 0.24968695. Brown-Forman Corporation's gearing of last year was 0.26005271. ==> This year is lower. ==> Score 1.

Q6. 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)=Total Current Assets/Total Current Liabilities
=2103/604
=3.48178808

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=2046.4/807.3
=2.53486932

Brown-Forman Corporation's current ratio of this year was 3.48178808. Brown-Forman Corporation's current ratio of last year was 2.53486932. ==> This year's current ratio is higher. ==> Score 1.

Q7. Change in Shares in Issue

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

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

Brown-Forman Corporation's number of shares in issue this year was 214.8. Brown-Forman Corporation's number of shares in issue last year was 215.1. ==> There is the same number of shares in issue this year, or fewer. ==> Score 1.

Efficiency

Q8. 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)=Gross Profit/Revenue
=2045/2961
=0.69064505

Gross Margin (Last Year)=Gross Profit/Revenue
=1917.8/2792.4
=0.68679272

Brown-Forman Corporation's gross margin of this year was 0.69064505. Brown-Forman Corporation's gross margin of last year was 0.68679272. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales 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/Total Assets at the beginning of this year (Jan13)
=2961/3832.3
=0.77264306

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Jan12)
=2792.4/3676.4
=0.75954738

Brown-Forman Corporation's asset turnover of this year was 0.77264306. Brown-Forman Corporation's asset turnover of last year was 0.75954738. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+1+0+1+1+1+1+1
=8

Good or high score = 8 or 9

Bad or low score = 0 or 1

Brown-Forman Corporation has an F-score of 8. It is a good or high score, which usually indicates a very healthy situation.


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.

Brown-Forman Corporation Annual Data

Apr04Apr05Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13
Q1 1111111111
Q2 1111111111
Q3 0101011101
Q4 1110111010
Q5 1111000100
Q6 1010111010
Q7 1000111111
Q8 1110001101
Q9 0101010101
F-score 7765577756

Brown-Forman Corporation Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
Q1 1111111111
Q2 1111111111
Q3 1100001111
Q4 0010000000
Q5 1100100001
Q6 0011100001
Q7 1111100001
Q8 0000111111
Q9 1110000111
F-score 7655635558
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