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Genpact Ltd. (NYSE:G)
Piotroski F-Score
7 (As of Today)

Good Sign:

Piotroski F-Score of 7 is 7, 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

Genpact Ltd. has an F-score of 7 indicating the company's financial situation is typical for a stable company.

G' s 10-Year Piotroski F-Score Range
Min: 5   Max: 8
Current: 7

5
8

During the past 12 years, the highest Piotroski F-Score of Genpact Ltd. was 8. The lowest was 5. And the median was 7.


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 48.842 + 70.262 + 63.876 + 46.737 = $230 Mil.
Cash Flow from Operations was 78.387 + 125.542 + 76.127 + 31.548 = $312 Mil.
Revenue was 558.459 + 534.886 + 534.804 + 503.848 = $2,132 Mil.
Gross Profit was 212.617 + 205.597 + 202.09 + 192.122 = $812 Mil.
Total Assets at the begining of this year (Dec12) was $2,606 Mil.
Total Assets was $2,689 Mil.
Long-Term Debt was $656 Mil.
Total Current Assets was $1,276 Mil.
Total Current Liabilities was $462 Mil.
Net Income was 53.401 + 25.175 + 61.1 + 38.54 = $178 Mil.

Revenue was 507.704 + 491.157 + 467.631 + 435.479 = $1,902 Mil.
Gross Profit was 197.878 + 193.904 + 182.409 + 170.014 = $744 Mil.
Total Assets at the begining of last year (Dec11) was $2,403 Mil.
Total Assets was $2,606 Mil.
Long-Term Debt was $659 Mil.
Total Current Assets was $1,129 Mil.
Total Current Liabilities was $518 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.

Genpact Ltd.'s current net income was 230. ==> 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.

Genpact Ltd.'s current cash flow from operations was 312. ==> 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)
=229.717/2605.927
=0.08815174

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Dec11)
=178.216/2403.387
=0.07415202

Genpact Ltd.'s return on assets of this year was 0.08815174. Genpact Ltd.'s return on assets of last year was 0.07415202. ==> 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.

Genpact Ltd.'s current net income was 230. Genpact Ltd.'s current cash flow from operations was 312. ==> 312 > 230 ==> 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
=656.258/2689.367
=0.2440195

Gearing (Last Year)=Long-Term Debt/Total Assets
=659.412/2605.927
=0.25304316

Genpact Ltd.'s gearing of this year was 0.2440195. Genpact Ltd.'s gearing of last year was 0.25304316. ==> 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
=1276.144/461.693
=2.76405317

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=1128.767/517.818
=2.17985277

Genpact Ltd.'s current ratio of this year was 2.76405317. Genpact Ltd.'s current ratio of last year was 2.17985277. ==> 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.

Genpact Ltd.'s number of shares in issue this year was 237.7. Genpact Ltd.'s number of shares in issue last year was 232.6. ==> There is more 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)=Gross Profit/Revenue
=812.426/2131.997
=0.38106339

Gross Margin (Last Year)=Gross Profit/Revenue
=744.205/1901.971
=0.39128094

Genpact Ltd.'s gross margin of this year was 0.38106339. Genpact Ltd.'s gross margin of last year was 0.39128094. ==> 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)
=2131.997/2605.927
=0.81813382

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Dec11)
=1901.971/2403.387
=0.79137109

Genpact Ltd.'s asset turnover of this year was 0.81813382. Genpact Ltd.'s asset turnover of last year was 0.79137109. ==> 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+1+1+1+0+0+1
=7

Good or high score = 8 or 9

Bad or low score = 0 or 1

Genpact Ltd. has an F-score of 7 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.

Genpact Ltd. Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 11111111
Q2 11111111
Q3 11111101
Q4 01111111
Q5 11111001
Q6 01011011
Q7 00000000
Q8 10100010
Q9 11011101
F-score 67677557

Genpact Ltd. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Q1 1111111111
Q2 1111111111
Q3 1110000011
Q4 1111111111
Q5 0001000011
Q6 0000111111
Q7 0000000000
Q8 0011111000
Q9 1110000111
F-score 5565555577
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