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Brown-Forman Corp (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 Corp 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: 4   Max: 8
Current: 8

4
8

During the past 13 years, the highest Piotroski F-Score of Brown-Forman Corp was 8. The lowest was 4. 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 (Apr14) TTM:Last Year (Apr13) TTM:
Net Income was 133 + 177 + 206 + 143 = $659 Mil.
Cash Flow from Operations was 259 + 189 + 108 + 93 = $649 Mil.
Revenue was 689 + 782 + 833 + 686 = $2,990 Mil.
Gross Profit was 493 + 532 + 576 + 477 = $2,078 Mil.
Total Assets at the begining of this year (Apr13) was $3,626 Mil.
Total Assets was $4,103 Mil.
Long-Term Debt was $997 Mil.
Total Current Assets was $2,177 Mil.
Total Current Liabilities was $561 Mil.
Net Income was 113 + 157 + 173 + 147 = $590 Mil.

Revenue was 660 + 747 + 777 + 666 = $2,850 Mil.
Gross Profit was 460 + 507 + 525 + 464 = $1,956 Mil.
Total Assets at the begining of last year (Apr12) was $3,477 Mil.
Total Assets was $3,626 Mil.
Long-Term Debt was $997 Mil.
Total Current Assets was $1,821 Mil.
Total Current Liabilities was $473 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 Corp's current net income was 659. ==> 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 Corp's current cash flow from operations was 649. ==> 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 (Apr13)
=659/3626
=0.18174297

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Apr12)
=590/3477
=0.16968651

Brown-Forman Corp's return on assets of this year was 0.18174297. Brown-Forman Corp's return on assets of last year was 0.16968651. ==> 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 Corp's current net income was 659. Brown-Forman Corp's current cash flow from operations was 649. ==> 649 =< 659 ==> 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
=997/4103
=0.24299293

Gearing (Last Year)=Long-Term Debt/Total Assets
=997/3626
=0.27495863

Brown-Forman Corp's gearing of this year was 0.24299293. Brown-Forman Corp's gearing of last year was 0.27495863. ==> 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
=2177/561
=3.88057041

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=1821/473
=3.84989429

Brown-Forman Corp's current ratio of this year was 3.88057041. Brown-Forman Corp's current ratio of last year was 3.84989429. ==> 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 Corp's number of shares in issue this year was 215. Brown-Forman Corp's number of shares in issue last year was 215.2. ==> 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
=2078/2990
=0.69498328

Gross Margin (Last Year)=Gross Profit/Revenue
=1956/2850
=0.68631579

Brown-Forman Corp's gross margin of this year was 0.69498328. Brown-Forman Corp's gross margin of last year was 0.68631579. ==> 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 (Apr13)
=2990/3626
=0.82460011

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Apr12)
=2850/3477
=0.81967213

Brown-Forman Corp's asset turnover of this year was 0.82460011. Brown-Forman Corp's asset turnover of last year was 0.81967213. ==> 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 Corp 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 Corp Annual Data

Apr05Apr06Apr07Apr08Apr09Apr10Apr11Apr12Apr13Apr14
Q1 1111111111
Q2 1111111111
Q3 1010111011
Q4 1101110100
Q5 1110001001
Q6 0101110101
Q7 0001111110
Q8 1100011011
Q9 1010101011
F-score 7655777567

Brown-Forman Corp Quarterly Data

Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14
Q1 1111111111
Q2 1111111111
Q3 1000011111
Q4 0100000000
Q5 1001000011
Q6 0111000011
Q7 1111000011
Q8 0001111111
Q9 1100001111
F-score 6646345588
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