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China Information Technology Inc (NAS:CNIT)
Piotroski F-Score
2 (As of Today)

Warning Sign:

Piotroski F-Score of 2 is low, which usually implies poor business operation.

The zones of discrimination were as such:

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

China Information Technology Inc has an F-score of 2. It is a bad or low score, which usually implies poor business operation.

CNIT' s 10-Year Piotroski F-Score Range
Min: 2   Max: 4
Current: 2

2
4

During the past 9 years, the highest Piotroski F-Score of China Information Technology Inc was 4. The lowest was 2. And the median was 3.


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 (Dec13) TTM:Last Year (Dec12) TTM:
Net Income was $-119.24 Mil.
Cash Flow from Operations was $-11.38 Mil.
Revenue was $76.15 Mil.
Gross Profit was $17.28 Mil.
Average Total Assets from the begining of this year (Dec12)
to the end of this year (Dec13) was (287.422 + 189.239) / 2 = $238.33 Mil.
Total Assets was $189.24 Mil.
Long-Term Debt was $0.31 Mil.
Total Current Assets was $81.21 Mil.
Total Current Liabilities was $127.99 Mil.
Net Income was $-89.63 Mil.

Revenue was $86.38 Mil.
Gross Profit was $20.50 Mil.
Average Total Assets from the begining of last year (Dec11)
to the end of last year (Dec12) was (361.792 + 287.422) / 2 = $324.61 Mil.
Total Assets was $287.42 Mil.
Long-Term Debt was $0.07 Mil.
Total Current Assets was $143.78 Mil.
Total Current Liabilities was $122.06 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

China Information Technology Inc's current net income (ttm) was -119.24. ==> Negative ==> Score 0.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

China Information Technology Inc's current cash flow from operations (ttm) was -11.38. ==> Negative ==> Score 0.

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 (TTM)/Average Total Assets from Dec12 to Dec13
=-119.237/238.3305
=-0.50030105

ROA (Last Year)=Net Income (TTM)/Average Total Assets from Dec11 to Dec12
=-89.631/324.607
=-0.27612159

China Information Technology Inc's return on assets of this year was -0.50030105. China Information Technology Inc's return on assets of last year was -0.27612159. ==> Last year is higher ==> Score 0.

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.

China Information Technology Inc's current net income (ttm) was -119.24. China Information Technology Inc's current cash flow from operations (ttm) was -11.38. ==> -11.38 > -119.24 ==> CFROA > ROA ==> Score 1.

Funding

Q5. Change in Gearing or Leverage

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

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

Gearing (This Year: Dec13)=Long-Term Debt/Total Assets
=0.313/189.239
=0.00165399

Gearing (Last Year: Dec12)=Long-Term Debt/Total Assets
=0.074/287.422
=0.00025746

China Information Technology Inc's gearing of this year was 0.00165399. China Information Technology Inc's gearing of last year was 0.00025746. ==> Last year is lower than this year ==> Score 0.

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: Dec13)=Total Current Assets/Total Current Liabilities
=81.212/127.991
=0.63451336

Current Ratio (Last Year: Dec12)=Total Current Assets/Total Current Liabilities
=143.784/122.058
=1.17799735

China Information Technology Inc's current ratio of this year was 0.63451336. China Information Technology Inc's current ratio of last year was 1.17799735. ==> Last year's current ratio is higher ==> Score 0.

Q7. 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.

China Information Technology Inc's number of shares in issue this year was 27.4. China Information Technology Inc's number of shares in issue last year was 27. ==> There is larger number of shares in issue this year. ==> Score 0.

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: TTM)=Gross Profit/Revenue
=17.275/76.145
=0.22686979

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=20.499/86.377
=0.23732012

China Information Technology Inc's gross margin of this year was 0.22686979. China Information Technology Inc's gross margin of last year was 0.23732012. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by average total assets throughout 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)/Average Total Assets from Dec12 to Dec13
=76.145/238.3305
=0.31949331

Asset Turnover (Last Year)=Revenue (TTM)/Average Total Assets from Dec11 to Dec12
=86.377/324.607
=0.26609716

China Information Technology Inc's asset turnover of this year was 0.31949331. China Information Technology Inc's asset turnover of last year was 0.26609716. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=0+0+0+1+0+0+0+0+1
=2

Good or high score = 8 or 9

Bad or low score = 0 or 1

China Information Technology Inc has an F-score of 2. It is a bad or low score, which usually implies poor business operation.


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, Altman Z-Score, Beneish M-Score


Historical Data

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

China Information Technology Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 11100
Q2 11100
Q3 00000
Q4 00111
Q5 00110
Q6 00000
Q7 00000
Q8 10000
Q9 01000
F-score 33421
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