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Google Inc (NAS:GOOG)
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

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

GOOG' s 10-Year Piotroski F-Score Range
Min: 3   Max: 6
Current: 5

3
6

During the past 13 years, the highest Piotroski F-Score of Google Inc was 6. The lowest was 3. 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 (Mar14) TTM:Last Year (Mar13) TTM:
Net Income was 3452 + 3376 + 2970 + 3228 = $13,026 Mil.
Cash Flow from Operations was 4391 + 5238 + 5083 + 4705 = $19,417 Mil.
Revenue was 15420 + 16858 + 14893 + 14105 = $61,276 Mil.
Gross Profit was 9459 + 9420 + 8480 + 8042 = $35,401 Mil.
Total Assets at the begining of this year (Mar13) was $96,692 Mil.
Total Assets was $116,526 Mil.
Long-Term Debt was $3,234 Mil.
Total Current Assets was $75,314 Mil.
Total Current Liabilities was $16,270 Mil.
Net Income was 3346 + 2886 + 2176 + 2785 = $11,193 Mil.

Revenue was 12951 + 14419 + 13304 + 11807 = $52,481 Mil.
Gross Profit was 7815 + 8206 + 7349 + 7130 = $30,500 Mil.
Total Assets at the begining of last year (Mar12) was $77,144 Mil.
Total Assets was $96,692 Mil.
Long-Term Debt was $2,989 Mil.
Total Current Assets was $62,808 Mil.
Total Current Liabilities was $13,252 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.

Google Inc's current net income was 13,026. ==> 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.

Google Inc's current cash flow from operations was 19,417. ==> 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 (Mar13)
=13026/96692
=0.13471642

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Mar12)
=11193/77144
=0.14509229

Google Inc's return on assets of this year was 0.13471642. Google Inc's return on assets of last year was 0.14509229. ==> 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.

Google Inc's current net income was 13,026. Google Inc's current cash flow from operations was 19,417. ==> 19,417 > 13,026 ==> 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)=Long-Term Debt/Total Assets
=3234/116526
=0.02775346

Gearing (Last Year)=Long-Term Debt/Total Assets
=2989/96692
=0.03091259

Google Inc's gearing of this year was 0.02775346. Google Inc's gearing of last year was 0.03091259. ==> This year is lower or equal to last year. ==> 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
=75314/16270
=4.62901045

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=62808/13252
=4.73951102

Google Inc's current ratio of this year was 4.62901045. Google Inc's current ratio of last year was 4.73951102. ==> 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.

Google Inc's number of shares in issue this year was 672.7. Google Inc's number of shares in issue last year was 684.5. ==> 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)=Gross Profit/Revenue
=35401/61276
=0.57773027

Gross Margin (Last Year)=Gross Profit/Revenue
=30500/52481
=0.58116271

Google Inc's gross margin of this year was 0.57773027. Google Inc's gross margin of last year was 0.58116271. ==> 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 (Mar13)
=61276/96692
=0.63372358

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Mar12)
=52481/77144
=0.68029918

Google Inc's asset turnover of this year was 0.63372358. Google Inc's asset turnover of last year was 0.68029918. ==> 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

Google 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.

Google Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 1000011000
Q4 1111111111
Q5 1111111011
Q6 1100110101
Q7 0000000000
Q8 0110111100
Q9 0000000010
F-score 6654676555

Google Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 1111111111
Q2 1111111111
Q3 0000000000
Q4 1111111111
Q5 0111111110
Q6 1000011101
Q7 0111000010
Q8 0000000001
Q9 0011100000
F-score 4566555550
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