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eBay Inc (NAS:EBAY)
Piotroski F-Score
5 (As of Today)

The zones of discrimination were as such:

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

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

EBAY' s 10-Year Piotroski F-Score Range
Min: 3   Max: 7
Current: 5

3
7

During the past 13 years, the highest Piotroski F-Score of eBay 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 (Dec13) TTM:Last Year (Dec12) TTM:
Net Income was 850 + 689 + 640 + 677 = $2,856 Mil.
Cash Flow from Operations was 1713 + 1334 + 1011 + 937 = $4,995 Mil.
Revenue was 4530 + 3892 + 3877 + 3748 = $16,047 Mil.
Gross Profit was 3081 + 2668 + 2666 + 2596 = $11,011 Mil.
Total Assets at the begining of this year (Dec12) was $37,074 Mil.
Total Assets was $41,488 Mil.
Long-Term Debt was $4,117 Mil.
Total Current Assets was $23,283 Mil.
Total Current Liabilities was $12,639 Mil.
Net Income was 750 + 597 + 692 + 570 = $2,609 Mil.

Revenue was 3993 + 3404 + 3398 + 3277 = $14,072 Mil.
Gross Profit was 2769 + 2382 + 2411 + 2294 = $9,856 Mil.
Total Assets at the begining of last year (Dec11) was $27,320 Mil.
Total Assets was $37,074 Mil.
Long-Term Debt was $4,106 Mil.
Total Current Assets was $21,398 Mil.
Total Current Liabilities was $10,924 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.

eBay Inc's current net income was 2,856. ==> 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.

eBay Inc's current cash flow from operations was 4,995. ==> 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 (Dec12)
=2856/37074
=0.07703512

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Dec11)
=2609/27320
=0.0954978

eBay Inc's return on assets of this year was 0.07703512. eBay Inc's return on assets of last year was 0.0954978. ==> 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.

eBay Inc's current net income was 2,856. eBay Inc's current cash flow from operations was 4,995. ==> 4,995 > 2,856 ==> 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 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=4117/41488
=0.09923351

Gearing (Last Year)=Long-Term Debt/Total Assets
=4106/37074
=0.11075147

eBay Inc's gearing of this year was 0.09923351. eBay Inc's gearing of last year was 0.11075147. ==> 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
=23283/12639
=1.84215523

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=21398/10924
=1.9588063

eBay Inc's current ratio of this year was 1.84215523. eBay Inc's current ratio of last year was 1.9588063. ==> 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 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

eBay Inc's number of shares in issue this year was 1310. eBay Inc's number of shares in issue last year was 1319. ==> 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
=11011/16047
=0.68617187

Gross Margin (Last Year)=Gross Profit/Revenue
=9856/14072
=0.70039795

eBay Inc's gross margin of this year was 0.68617187. eBay Inc's gross margin of last year was 0.70039795. ==> Last year's gross margin is higher ==> Score 0.

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 (Dec12)
=16047/37074
=0.43283703

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Dec11)
=14072/27320
=0.51508053

eBay Inc's asset turnover of this year was 0.43283703. eBay Inc's asset turnover of last year was 0.51508053. ==> 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+1+0+1+0+0
=5

Good or high score = 8 or 9

Bad or low score = 0 or 1

eBay 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.

eBay Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 1100110100
Q4 1111111111
Q5 1100000101
Q6 0001011010
Q7 0001110100
Q8 1100001000
Q9 1101010100
F-score 7736575744

eBay Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Q1 1111111111
Q2 1111111111
Q3 0111100000
Q4 1100011111
Q5 0111000011
Q6 0001111100
Q7 1111000011
Q8 0000000000
Q9 1110100100
F-score 5766544555
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