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Morgan Stanley (NYSE:MS)
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

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

MS' s 10-Year Piotroski F-Score Range
Min: 1   Max: 7
Current: 6

1
7

During the past 8 years, the highest Piotroski F-Score of Morgan Stanley was 7. The lowest was 1. And the median was 4.


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 (Jun14) TTM:Last Year (Jun13) TTM:
Net Income was 1899 + 1505 + 84 + 906 = $4,394 Mil.
Cash Flow from Operations was 548 + 5327 + 18733 + -1582 = $23,026 Mil.
Revenue was 8608 + 8929 + 7824 + 7932 = $33,293 Mil.
Gross Profit was 0 + 0 + 0 + 0 = $0 Mil.
Total Assets at the begining of this year (Jun13) was $802,691 Mil.
Total Assets was $826,568 Mil.
Long-Term Debt was $174,932 Mil.
Total Current Assets was $0 Mil.
Total Current Liabilities was $0 Mil.
Net Income was 980 + 962 + 594 + -1023 = $1,513 Mil.

Revenue was 8515 + 8150 + 6935 + 5289 = $28,889 Mil.
Gross Profit was 0 + 0 + 0 + 0 = $0 Mil.
Total Assets at the begining of last year (Jun12) was $748,517 Mil.
Total Assets was $802,691 Mil.
Long-Term Debt was $180,252 Mil.
Total Current Assets was $0 Mil.
Total Current Liabilities was $0 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.

Morgan Stanley's current net income was 4,394. ==> 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.

Morgan Stanley's current cash flow from operations was 23,026. ==> 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 (Jun13)
=4394/802691
=0.00547409

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Jun12)
=1513/748517
=0.00202133

Morgan Stanley's return on assets of this year was 0.00547409. Morgan Stanley's return on assets of last year was 0.00202133. ==> 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.

Morgan Stanley's current net income was 4,394. Morgan Stanley's current cash flow from operations was 23,026. ==> 23,026 > 4,394 ==> 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
=174932/826568
=0.21163655

Gearing (Last Year)=Long-Term Debt/Total Assets
=180252/802691
=0.22455964

Morgan Stanley's gearing of this year was 0.21163655. Morgan Stanley's gearing of last year was 0.22455964. ==> 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
=0/0
=

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=0/0
=

Morgan Stanley's current ratio of this year was . Morgan Stanley's current ratio of last year was . ==> 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.

Morgan Stanley's number of shares in issue this year was 1969.7. Morgan Stanley's number of shares in issue last year was 1951.4. ==> There is larger 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
=0/33293
=0

Gross Margin (Last Year)=Gross Profit/Revenue
=0/28889
=0

Morgan Stanley's gross margin of this year was 0. Morgan Stanley's gross margin of last year was 0. ==> 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 (Jun13)
=33293/802691
=0.04147673

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Jun12)
=28889/748517
=0.03859498

Morgan Stanley's asset turnover of this year was 0.04147673. Morgan Stanley's asset turnover of last year was 0.03859498. ==> 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+1+0+0+0+1
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

Morgan Stanley 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.

Morgan Stanley Annual Data

Dec94Dec95Dec96Dec09Dec10Dec11Dec12Dec13
Q1 1111
Q2 1111
Q3 0001
Q4 1111
Q5 0011
Q6 0000
Q7 0000
Q8 0000
Q9 0001
F-score 3346

Morgan Stanley Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Q1 1101111111
Q2 1111111111
Q3 0000001111
Q4 1111111111
Q5 0111101111
Q6 0000000000
Q7 0000000100
Q8 0000000000
Q9 1000011111
F-score 4434446766
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