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Cisco Systems Inc (NAS:CSCO)
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

Cisco Systems Inc has an F-score of 5 indicating the company's financial situation is typical for a stable company.

CSCO' s 10-Year Piotroski F-Score Range
Min: 4   Max: 9
Current: 5

4
9

During the past 13 years, the highest Piotroski F-Score of Cisco Systems Inc was 9. 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 (Oct14) TTM:Last Year (Oct13) TTM:
Net Income was 1429 + 2181 + 2247 + 1828 = $7,685 Mil.
Cash Flow from Operations was 2873 + 3198 + 3612 + 2491 = $12,174 Mil.
Revenue was 11155 + 11545 + 12357 + 12245 = $47,302 Mil.
Gross Profit was 5951 + 7006 + 7405 + 7333 = $27,695 Mil.
Average Total Assets from the begining of this year (Oct13)
to the end of this year (Oct14) was
(100741 + 98427 + 101856 + 105134 + 103978) / 5 = $102027.2 Mil.
Total Assets at the begining of this year (Oct13) was $100,741 Mil.
Long-Term Debt was $19,615 Mil.
Total Current Assets was $66,396 Mil.
Total Current Liabilities was $20,056 Mil.
Net Income was 3143 + 2478 + 2270 + 1996 = $9,887 Mil.

Revenue was 12098 + 12216 + 12417 + 12085 = $48,816 Mil.
Gross Profit was 7343 + 7511 + 7347 + 7407 = $29,608 Mil.
Average Total Assets from the begining of last year (Oct12)
to the end of last year (Oct13) was
(92643 + 96378 + 97084 + 101191 + 100741) / 5 = $97607.4 Mil.
Total Assets at the begining of last year (Oct12) was $92,643 Mil.
Long-Term Debt was $12,947 Mil.
Total Current Assets was $62,796 Mil.
Total Current Liabilities was $21,728 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.

Cisco Systems Inc's current net income (TTM) was 7,685. ==> 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.

Cisco Systems Inc's current cash flow from operations (TTM) was 12,174. ==> 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 (TTM)/Total Assets at the Beginning of This Year (Oct13)
=7685/100741
=0.07628473

Cisco Systems Inc's return on assets of this year was 0.07628473. Cisco Systems Inc's return on assets of last year was 0.1067215. ==> 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.

Cisco Systems Inc's current net income (TTM) was 7,685. Cisco Systems Inc's current cash flow from operations (TTM) was 12,174. ==> 12,174 > 7,685 ==> CFROA > ROA ==> Score 1.

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

Gearing (This Year: Oct14)=Long-Term Debt/Average Total Assets from Oct13 to Oct14
=19615/102027.2
=0.19225265

Gearing (Last Year: Oct13)=Long-Term Debt/Average Total Assets from Oct12 to Oct13
=12947/97607.4
=0.13264363

Cisco Systems Inc's gearing of this year was 0.19225265. Cisco Systems Inc's gearing of last year was 0.13264363. ==> 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: Oct14)=Total Current Assets/Total Current Liabilities
=66396/20056
=3.31053051

Current Ratio (Last Year: Oct13)=Total Current Assets/Total Current Liabilities
=62796/21728
=2.89009573

Cisco Systems Inc's current ratio of this year was 3.31053051. Cisco Systems Inc's current ratio of last year was 2.89009573. ==> 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 0 if there is larger number of shares in issue this year, 1 otherwise.

Cisco Systems Inc's number of shares in issue this year was 5156. Cisco Systems Inc's number of shares in issue last year was 5430. ==> There is smaller number of shares in issue this year, or the same. ==> 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: TTM)=Gross Profit/Revenue
=27695/47302
=0.58549321

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=29608/48816
=0.60652245

Cisco Systems Inc's gross margin of this year was 0.58549321. Cisco Systems Inc's gross margin of last year was 0.60652245. ==> 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 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 (Oct13)
=47302/100741
=0.4695407

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Oct12)
=48816/92643
=0.52692594

Cisco Systems Inc's asset turnover of this year was 0.4695407. Cisco Systems Inc's asset turnover of last year was 0.52692594. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+1+0+1+1+0+0
=5

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

Cisco Systems 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.

Cisco Systems Inc Annual Data

Jul05Jul06Jul07Jul08Jul09Jul10Jul11Jul12Jul13Jul14
Q1 1111111111
Q2 1111111111
Q3 1110010110
Q4 1111111111
Q5 1011000110
Q6 1011101101
Q7 1111111111
Q8 0001010000
Q9 1100000010
F-score 8677565775

Cisco Systems Inc Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
Q1 1111111111
Q2 1111111111
Q3 1111110000
Q4 1111111111
Q5 1111111000
Q6 1110000111
Q7 1111001111
Q8 0100000000
Q9 0000100000
F-score 7876655555
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