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Novo Nordisk A/S (NYSE:NVO)
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

Novo Nordisk A/S has an F-score of 7 indicating the company's financial situation is typical for a stable company.

NVO' 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 Novo Nordisk A/S was 9. The lowest was 3. And the median was 8.


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 1194.59859415 + 1104.763643 + 1173.61873399 + 1181.81818182 = $4,655 Mil.
Cash Flow from Operations was 752.682204957 + 980.470888848 + 1137.39480424 + 1278.16777817 = $4,149 Mil.
Revenue was 3763.04106548 + 3960.21171747 + 3752.46981339 + 3752.19375219 = $15,228 Mil.
Gross Profit was 3121.90159083 + 3339.66052199 + 3107.5740944 + 3119.34011934 = $12,688 Mil.
Total Assets at the begining of this year (Mar13) was $10,910 Mil.
Total Assets was $11,698 Mil.
Long-Term Debt was $0 Mil.
Total Current Assets was $6,383 Mil.
Total Current Liabilities was $4,883 Mil.
Net Income was 1045.07337526 + 1026.02959529 + 985.736649852 + 882.323815811 = $3,939 Mil.

Revenue was 3491.09014675 + 3737.20805848 + 3451.90467907 + 3213.07146394 = $13,893 Mil.
Gross Profit was 2860.5870021 + 3175.07577108 + 2845.71229779 + 2647.96170985 = $11,529 Mil.
Total Assets at the begining of last year (Mar12) was $10,828 Mil.
Total Assets was $10,910 Mil.
Long-Term Debt was $0 Mil.
Total Current Assets was $6,254 Mil.
Total Current Liabilities was $4,477 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.

Novo Nordisk A/S's current net income was 4,655. ==> 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.

Novo Nordisk A/S's current cash flow from operations was 4,149. ==> 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)
=4654.79915297/10909.6785465
=0.42666694

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Mar12)
=3939.16343622/10827.8790023
=0.36379825

Novo Nordisk A/S's return on assets of this year was 0.42666694. Novo Nordisk A/S's return on assets of last year was 0.36379825. ==> 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.

Novo Nordisk A/S's current net income was 4,655. Novo Nordisk A/S's current cash flow from operations was 4,149. ==> 4,149 =< 4,655 ==> CFROA =< ROA ==> Score 0.

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
=0/11698.2981872
=0

Gearing (Last Year)=Long-Term Debt/Total Assets
=0/10909.6785465
=0

Novo Nordisk A/S's gearing of this year was 0. Novo Nordisk A/S's gearing of last year was 0. ==> 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
=6382.90788013/4882.90788013
=1.307194

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=6254.19287212/4476.93920335
=1.39697963

Novo Nordisk A/S's current ratio of this year was 1.307194. Novo Nordisk A/S's current ratio of last year was 1.39697963. ==> 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.

Novo Nordisk A/S's number of shares in issue this year was 2653.1. Novo Nordisk A/S's number of shares in issue last year was 2732.5. ==> 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)=Gross Profit/Revenue
=12688.4763266/15227.9163485
=0.83323785

Gross Margin (Last Year)=Gross Profit/Revenue
=11529.3367808/13893.2743482
=0.82985022

Novo Nordisk A/S's gross margin of this year was 0.83323785. Novo Nordisk A/S's gross margin of last year was 0.82985022. ==> 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)
=15227.9163485/10909.6785465
=1.39581714

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Mar12)
=13893.2743482/10827.8790023
=1.28310211

Novo Nordisk A/S's asset turnover of this year was 1.39581714. Novo Nordisk A/S's asset turnover of last year was 1.28310211. ==> 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+0+1+0+1+1+1
=7

Good or high score = 8 or 9

Bad or low score = 0 or 1

Novo Nordisk A/S 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.

Novo Nordisk A/S Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 0011011111
Q4 1111111111
Q5 0111111111
Q6 0011010000
Q7 1110111111
Q8 1111111111
Q9 0011010111
F-score 5698697888

Novo Nordisk A/S Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
Q1 1111111111
Q2 1111111111
Q3 0111111111
Q4 1111110010
Q5 1101111111
Q6 0000000100
Q7 0111111111
Q8 1111111111
Q9 0111111111
F-score 5878887887
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