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

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: 2   Max: 8
Current: 6

2
8

During the past 13 years, the highest Piotroski F-Score of GlaxoSmithKline PLC was 8. The lowest was 2. 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 (Sep14) TTM:Last Year (Sep13) TTM:
Net Income was 4027.82324059 + 1109.6345515 + 1106.59898477 + 653.094462541 = $6,897 Mil.
Cash Flow from Operations was 3579.37806874 + 1539.86710963 + 1296.10829103 + 2073.28990228 = $8,489 Mil.
Revenue was 11302.7823241 + 9323.92026578 + 9409.47546531 + 9195.43973941 = $39,232 Mil.
Gross Profit was 7168.57610475 + 6428.57142857 + 6495.76988156 + 6216.61237785 = $26,310 Mil.
Average Total Assets from the begining of this year (Sep13)
to the end of this year (Sep14) was
(65357.7106518 + 68880.5237316 + 65958.4717608 + 65736.0406091 + 65640.0651466) / 5 = $66314.56238 Mil.
Total Assets at the begining of this year (Sep13) was $65,358 Mil.
Long-Term Debt was $22,181 Mil.
Total Current Assets was $24,204 Mil.
Total Current Liabilities was $24,870 Mil.
Net Income was 1369.95153473 + 1449.47209653 + 1617.64705882 + 1540.54054054 = $5,978 Mil.

Revenue was 10988.6914378 + 9760.18099548 + 10244.5820433 + 10349.7615262 = $41,343 Mil.
Gross Profit was 7728.59450727 + 6779.78883861 + 7191.9504644 + 6993.64069952 = $28,694 Mil.
Average Total Assets from the begining of last year (Sep12)
to the end of last year (Sep13) was
(65246.7741935 + 67012.9240711 + 64693.8159879 + 65106.8111455 + 65357.7106518) / 5 = $65483.60721 Mil.
Total Assets at the begining of last year (Sep12) was $65,247 Mil.
Long-Term Debt was $24,889 Mil.
Total Current Assets was $21,418 Mil.
Total Current Liabilities was $20,401 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 (TTM) was 6,897. ==> 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 (TTM) was 8,489. ==> 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 (TTM)/Total Assets at the Beginning of This Year (Sep13)
=6897.1512394/65357.7106518
=0.10552927

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=5977.61123063/65246.7741935
=0.09161543

GlaxoSmithKline PLC's return on assets of this year was 0.10552927. GlaxoSmithKline PLC's return on assets of last year was 0.09161543. ==> 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 (TTM) was 6,897. GlaxoSmithKline PLC's current cash flow from operations (TTM) was 8,489. ==> 8,489 > 6,897 ==> 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: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=22180.781759/66314.56238
=0.3344783

Gearing (Last Year: Sep13)=Long-Term Debt/Average Total Assets from Sep12 to Sep13
=24888.7122417/65483.60721
=0.38007546

GlaxoSmithKline PLC's gearing of this year was 0.3344783. GlaxoSmithKline PLC's gearing of last year was 0.38007546. ==> 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: Sep14)=Total Current Assets/Total Current Liabilities
=24203.5830619/24869.7068404
=0.97321546

Current Ratio (Last Year: Sep13)=Total Current Assets/Total Current Liabilities
=21418.1240064/20400.63593
=1.04987531

GlaxoSmithKline PLC's current ratio of this year was 0.97321546. GlaxoSmithKline PLC's current ratio of last year was 1.04987531. ==> 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.

GlaxoSmithKline PLC's number of shares in issue this year was 2432.5. GlaxoSmithKline PLC's number of shares in issue last year was 2461.5. ==> 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: TTM)=Gross Profit/Revenue
=26309.5297927/39231.6177946
=0.67062057

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=28693.9745098/41343.2160029
=0.69404312

GlaxoSmithKline PLC's gross margin of this year was 0.67062057. GlaxoSmithKline PLC's gross margin of last year was 0.69404312. ==> Last year's gross margin is higher ==> Score 0.

Q9. 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 (Sep13)
=39231.6177946/65357.7106518
=0.60025998

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=41343.2160029/65246.7741935
=0.63364383

GlaxoSmithKline PLC's asset turnover of this year was 0.60025998. GlaxoSmithKline PLC's asset turnover of last year was 0.63364383. ==> 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+1+0+1+0+0
=6

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

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 0010001100
Q6 0110100001
Q7 1111110111
Q8 0010010000
Q9 0010010110
F-score 4684574746

GlaxoSmithKline PLC Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 1111111111
Q2 1111111111
Q3 1100001111
Q4 1001111111
Q5 1100000111
Q6 0001011010
Q7 1111111011
Q8 1000000000
Q9 0001100000
F-score 8535466576
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