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GlaxoSmithKline PLC (NYSE:GSK)
Piotroski F-Score
6 (As of Today)

The zones of discrimination were as such:

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

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

GSK' s 10-Year Piotroski F-Score Range
Min: 3   Max: 7
Current: 6

3
7

During the past 13 years, the highest Piotroski F-Score of GlaxoSmithKline PLC 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 4054.36573311 + 1560.38647343 + 1585.73596358 + 1471.66921899 = $8,672 Mil.
Cash Flow from Operations was 3602.96540362 + 3344.60547504 + 2596.35811836 + 1909.64777948 = $11,454 Mil.
Revenue was 11377.2652389 + 10483.0917874 + 10042.4886191 + 9909.64777948 = $41,812 Mil.
Gross Profit was 7215.815486 + 7083.73590982 + 7050.07587253 + 6883.61408882 = $28,233 Mil.
Total Assets at the begining of this year (Dec12) was $66,264 Mil.
Total Assets was $69,334 Mil.
Long-Term Debt was $25,463 Mil.
Total Current Assets was $25,086 Mil.
Total Current Liabilities was $22,532 Mil.
Net Income was 1354.63258786 + 1776.52733119 + 1931.35725429 + 2092.8 = $7,155 Mil.

Revenue was 10865.8146965 + 10493.5691318 + 10081.1232449 + 10624 = $42,065 Mil.
Gross Profit was 7642.17252396 + 7135.04823151 + 6960.99843994 + 7715.2 = $29,453 Mil.
Total Assets at the begining of last year (Dec11) was $63,789 Mil.
Total Assets was $66,264 Mil.
Long-Term Debt was $23,436 Mil.
Total Current Assets was $21,872 Mil.
Total Current Liabilities was $22,069 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.

GlaxoSmithKline PLC's current net income was 8,672. ==> 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.

GlaxoSmithKline PLC's current cash flow from operations was 11,454. ==> 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)
=8672.15738911/66263.5782748
=0.13087367

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Dec11)
=7155.31717334/63788.8198758
=0.11217196

GlaxoSmithKline PLC's return on assets of this year was 0.13087367. GlaxoSmithKline PLC's return on assets of last year was 0.11217196. ==> 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.

GlaxoSmithKline PLC's current net income was 8,672. GlaxoSmithKline PLC's current cash flow from operations was 11,454. ==> 11,454 > 8,672 ==> 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
=25462.9324547/69334.431631
=0.36724802

Gearing (Last Year)=Long-Term Debt/Total Assets
=23436.1022364/66263.5782748
=0.35368

GlaxoSmithKline PLC's gearing of this year was 0.36724802. GlaxoSmithKline PLC's gearing of last year was 0.35368. ==> Last year is lower ==> 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)=Total Current Assets/Total Current Liabilities
=25085.6672158/22532.1252059
=1.11332895

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=21872.2044728/22068.6900958
=0.99109663

GlaxoSmithKline PLC's current ratio of this year was 1.11332895. GlaxoSmithKline PLC's current ratio of last year was 0.99109663. ==> 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.

GlaxoSmithKline PLC's number of shares in issue this year was 2443. GlaxoSmithKline PLC's number of shares in issue last year was 2455.5. ==> 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
=28233.2413572/41812.4934249
=0.67523458

Gross Margin (Last Year)=Gross Profit/Revenue
=29453.4191954/42064.5070732
=0.70019647

GlaxoSmithKline PLC's gross margin of this year was 0.67523458. GlaxoSmithKline PLC's gross margin of last year was 0.70019647. ==> 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)
=41812.4934249/66263.5782748
=0.63100265

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Dec11)
=42064.5070732/63788.8198758
=0.65943385

GlaxoSmithKline PLC's asset turnover of this year was 0.63100265. GlaxoSmithKline PLC's asset turnover of last year was 0.65943385. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+1+1+0+1+1+0+0
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

GlaxoSmithKline PLC 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.

GlaxoSmithKline PLC Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 0110010101
Q4 1101111101
Q5 0010010100
Q6 0110100001
Q7 1111110111
Q8 0010010000
Q9 0110010010
F-score 4784583646

GlaxoSmithKline PLC Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Q1 1111111111
Q2 1111111111
Q3 0111100001
Q4 1111001111
Q5 1111100000
Q6 0000001011
Q7 1111111111
Q8 0011000000
Q9 0100011000
F-score 5688535466
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