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Honda Motor Co Ltd (NYSE:HMC)
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

Honda Motor Co Ltd has an F-score of 5 indicating the company's financial situation is typical for a stable company.

HMC' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 7

3
9

During the past 13 years, the highest Piotroski F-Score of Honda Motor Co Ltd was 9. 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 1549.05985871 + 1231.13429477 + 1229.00885897 + 774.893103378 = $4,784 Mil.
Cash Flow from Operations was 1917.82076117 + 3756.89884423 + 3051.87964644 + 2742.03645737 = $11,469 Mil.
Revenue was 29113.915633 + 29561.4298865 + 28433.9289477 + 28079.1341885 = $115,188 Mil.
Gross Profit was 7826.09072773 + 7562.73908152 + 7120.14286718 + 7103.29589394 = $29,612 Mil.
Total Assets at the begining of this year (Dec12) was $140,565 Mil.
Total Assets was $149,834 Mil.
Long-Term Debt was $33,035 Mil.
Total Current Assets was $55,041 Mil.
Total Current Liabilities was $43,225 Mil.
Net Income was 869.556917964 + 1040.75278752 + 1668.75277127 + 881.135233594 = $4,460 Mil.

Revenue was 27238.3390599 + 28745.725387 + 30859.6820168 + 29600.0344607 = $116,444 Mil.
Gross Profit was 7020.53717802 + 7194.39839014 + 8167.41622854 + 7721.0899424 = $30,103 Mil.
Total Assets at the begining of last year (Dec11) was $141,395 Mil.
Total Assets was $140,565 Mil.
Long-Term Debt was $26,811 Mil.
Total Current Assets was $54,597 Mil.
Total Current Liabilities was $42,982 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.

Honda Motor Co Ltd's current net income was 4,784. ==> 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.

Honda Motor Co Ltd's current cash flow from operations was 11,469. ==> 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)
=4784.09611583/140565.496643
=0.03403464

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Dec11)
=4460.19771034/141394.626059
=0.03154432

Honda Motor Co Ltd's return on assets of this year was 0.03403464. Honda Motor Co Ltd's return on assets of last year was 0.03154432. ==> 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.

Honda Motor Co Ltd's current net income was 4,784. Honda Motor Co Ltd's current cash flow from operations was 11,469. ==> 11,469 > 4,784 ==> 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
=33034.5698287/149833.935679
=0.22047455

Gearing (Last Year)=Long-Term Debt/Total Assets
=26810.9434301/140565.496643
=0.1907363

Honda Motor Co Ltd's gearing of this year was 0.22047455. Honda Motor Co Ltd's gearing of last year was 0.1907363. ==> 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
=55040.9980629/43224.7472557
=1.27336772

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=54597.453345/42982.28121
=1.27023164

Honda Motor Co Ltd's current ratio of this year was 1.27336772. Honda Motor Co Ltd's current ratio of last year was 1.27023164. ==> 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.

Honda Motor Co Ltd's number of shares in issue this year was 1802.3. Honda Motor Co Ltd's number of shares in issue last year was 1802.3. ==> 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
=29612.2685704/115188.408656
=0.25707681

Gross Margin (Last Year)=Gross Profit/Revenue
=30103.4417391/116443.780924
=0.2585234

Honda Motor Co Ltd's gross margin of this year was 0.25707681. Honda Motor Co Ltd's gross margin of last year was 0.2585234. ==> 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)
=115188.408656/140565.496643
=0.81946432

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Dec11)
=116443.780924/141394.626059
=0.82353753

Honda Motor Co Ltd's asset turnover of this year was 0.81946432. Honda Motor Co Ltd's asset turnover of last year was 0.82353753. ==> 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+0+0+0
=5

Good or high score = 8 or 9

Bad or low score = 0 or 1

Honda Motor Co Ltd 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.

Honda Motor Co Ltd Annual Data

Mar04Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13
Q1 1111111111
Q2 1111111111
Q3 1000101101
Q4 1101111111
Q5 0101100100
Q6 1010001010
Q7 1111100111
Q8 0000000101
Q9 0001100100
F-score 6546735856

Honda Motor Co Ltd Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Q1 1111111111
Q2 1111111111
Q3 0001111001
Q4 1111111111
Q5 1100000000
Q6 0011100001
Q7 1011111111
Q8 0000011000
Q9 0001111000
F-score 5457777667
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