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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 7 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 (Mar14) TTM:Last Year (Mar13) TTM:
Net Income was 1664.17458861 + 1549.05985871 + 1231.13429477 + 1229.00885897 = $5,673 Mil.
Cash Flow from Operations was 3500.88816881 + 1917.82076117 + 3756.89884423 + 3051.87964644 = $12,227 Mil.
Revenue was 30229.4208359 + 29113.915633 + 29561.4298865 + 28433.9289477 = $117,339 Mil.
Gross Profit was 8005.5242148 + 7826.09072773 + 7562.73908152 + 7120.14286718 = $30,514 Mil.
Total Assets at the begining of this year (Mar13) was $139,481 Mil.
Total Assets was $152,473 Mil.
Long-Term Debt was $31,565 Mil.
Total Current Assets was $56,328 Mil.
Total Current Liabilities was $45,983 Mil.
Net Income was 774.893103378 + 869.556917964 + 1040.75278752 + 1668.75277127 = $4,354 Mil.

Revenue was 28079.1341885 + 27238.3390599 + 28745.725387 + 30859.6820168 = $114,923 Mil.
Gross Profit was 7103.29589394 + 7020.53717802 + 7194.39839014 + 8167.41622854 = $29,486 Mil.
Total Assets at the begining of last year (Mar12) was $145,075 Mil.
Total Assets was $139,481 Mil.
Long-Term Debt was $27,730 Mil.
Total Current Assets was $54,451 Mil.
Total Current Liabilities was $41,828 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 5,673. ==> 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 12,227. ==> 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)
=5673.37760107/139480.72792
=0.04067499

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Mar12)
=4353.95558012/145074.570472
=0.03001185

Honda Motor Co Ltd's return on assets of this year was 0.04067499. Honda Motor Co Ltd's return on assets of last year was 0.03001185. ==> 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 5,673. Honda Motor Co Ltd's current cash flow from operations was 12,227. ==> 12,227 > 5,673 ==> 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
=31564.7972828/152472.535088
=0.20701956

Gearing (Last Year)=Long-Term Debt/Total Assets
=27730.1601915/139480.72792
=0.19880998

Honda Motor Co Ltd's gearing of this year was 0.20701956. Honda Motor Co Ltd's gearing of last year was 0.19880998. ==> Last year is lower than this year ==> 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
=56328.1149349/45983.0271916
=1.22497622

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=54451.3287915/41827.8197181
=1.30179697

Honda Motor Co Ltd's current ratio of this year was 1.22497622. Honda Motor Co Ltd's current ratio of last year was 1.30179697. ==> 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.

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 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
=30514.4968912/117338.695303
=0.26005485

Gross Margin (Last Year)=Gross Profit/Revenue
=29485.6476906/114922.880652
=0.25656899

Honda Motor Co Ltd's gross margin of this year was 0.26005485. Honda Motor Co Ltd's gross margin of last year was 0.25656899. ==> This year's gross margin is higher. ==> Score 1.

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)
=117338.695303/139480.72792
=0.84125382

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Mar12)
=114922.880652/145074.570472
=0.7921642

Honda Motor Co Ltd's asset turnover of this year was 0.84125382. Honda Motor Co Ltd's asset turnover of last year was 0.7921642. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+1+1+0+0+1+1+1
=7

Good or high score = 8 or 9

Bad or low score = 0 or 1

Honda Motor Co Ltd has an F-score of 7 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

Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14
Q1 1111111111
Q2 1111111111
Q3 0001011011
Q4 1011111111
Q5 1011001000
Q6 0100010100
Q7 1111001111
Q8 0000001011
Q9 0011001001
F-score 5467358567

Honda Motor Co Ltd Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Q1 1111111111
Q2 1111111111
Q3 0011110011
Q4 1111111111
Q5 1000000000
Q6 0111000010
Q7 1111101111
Q8 0000110001
Q9 0011110001
F-score 5577766677
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