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Google Inc (NAS:GOOG)
Piotroski F-Score
6 (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

Google Inc has an F-score of 6 indicating the company's financial situation is typical for a stable company.

GOOG' s 10-Year Piotroski F-Score Range
Min: 4   Max: 8
Current: 6

4
8

During the past 13 years, the highest Piotroski F-Score of Google Inc was 8. The lowest was 4. And the median was 5.


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 (Mar15) TTM:Last Year (Mar14) TTM:
Net Income was 3422 + 2813 + 4757 + 3586 = $14,578 Mil.
Cash Flow from Operations was 5627 + 5994 + 6364 + 6617 = $24,602 Mil.
Revenue was 15955 + 16523 + 18103 + 17258 = $67,839 Mil.
Gross Profit was 9841 + 9828 + 11182 + 10902 = $41,753 Mil.
Average Total Assets from the begining of this year (Mar14)
to the end of this year (Mar15) was
(116526 + 121608 + 125781 + 131133 + 133400) / 5 = $125689.6 Mil.
Total Assets at the begining of this year (Mar14) was $116,526 Mil.
Long-Term Debt was $3,226 Mil.
Total Current Assets was $80,313 Mil.
Total Current Liabilities was $14,336 Mil.
Net Income was 3228 + 2970 + 3376 + 3452 = $13,026 Mil.

Revenue was 13107 + 13754 + 15707 + 15420 = $57,988 Mil.
Gross Profit was 7912 + 8345 + 9454 + 9459 = $35,170 Mil.
Average Total Assets from the begining of last year (Mar13)
to the end of last year (Mar14) was
(96692 + 101182 + 105068 + 110920 + 116526) / 5 = $106077.6 Mil.
Total Assets at the begining of last year (Mar13) was $96,692 Mil.
Long-Term Debt was $3,234 Mil.
Total Current Assets was $75,314 Mil.
Total Current Liabilities was $16,270 Mil.

Profitability

Question 1. 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.

Google Inc's current net income (TTM) was 14,578. ==> Positive ==> Score 1.

Question 2. 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.

Google Inc's current cash flow from operations (TTM) was 24,602. ==> Positive ==> Score 1.

Question 3. 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 (Mar14)
=14578/116526
=0.12510513

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Mar13)
=13026/96692
=0.13471642

Google Inc's return on assets of this year was 0.12510513. Google Inc's return on assets of last year was 0.13471642. ==> Last year is higher ==> Score 0.

Question 4. 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.

Google Inc's current net income (TTM) was 14,578. Google Inc's current cash flow from operations (TTM) was 24,602. ==> 24,602 > 14,578 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. 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: Mar15)=Long-Term Debt/Average Total Assets from Mar14 to Mar15
=3226/125689.6
=0.0256664

Gearing (Last Year: Mar14)=Long-Term Debt/Average Total Assets from Mar13 to Mar14
=3234/106077.6
=0.03048712

Google Inc's gearing of this year was 0.0256664. Google Inc's gearing of last year was 0.03048712. ==> This year is lower or equal to last year. ==> Score 1.

Question 6. 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: Mar15)=Total Current Assets/Total Current Liabilities
=80313/14336
=5.60219029

Current Ratio (Last Year: Mar14)=Total Current Assets/Total Current Liabilities
=75314/16270
=4.62901045

Google Inc's current ratio of this year was 5.60219029. Google Inc's current ratio of last year was 4.62901045. ==> This year's current ratio is higher. ==> Score 1.

Question 7. 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.

Google Inc's number of shares in issue this year was 689.5. Google Inc's number of shares in issue last year was 685.2. ==> There is larger number of shares in issue this year. ==> Score 0.

Efficiency

Question 8. 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
=41753/67839
=0.61547193

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=35170/57988
=0.60650479

Google Inc's gross margin of this year was 0.61547193. Google Inc's gross margin of last year was 0.60650479. ==> This year's gross margin is higher. ==> Score 1.

Question 9. 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 (Mar14)
=67839/116526
=0.58217908

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Mar13)
=57988/96692
=0.59971869

Google Inc's asset turnover of this year was 0.58217908. Google Inc's asset turnover of last year was 0.59971869. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+0+1+1+1+0+1+0
=6

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

Google Inc has an F-score of 6 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.

Google Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Question 1 1111111111
Question 2 1111111111
Question 3 0000110000
Question 4 1111111111
Question 5 1111110110
Question 6 1001101011
Question 7 0001100000
Question 8 1101111011
Question 9 0000000101
F-score 6547865566

Google Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
Question 1 1111111111
Question 2 1111111111
Question 3 0000000000
Question 4 1111111111
Question 5 1111110001
Question 6 0011101011
Question 7 1000000000
Question 8 0000111111
Question 9 1100000110
F-score 6555655566
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