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Procter & Gamble Co (NYSE:PG)
Piotroski F-Score
5 (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

Procter & Gamble Co has an F-score of 5 indicating the company's financial situation is typical for a stable company.

PG' s 10-Year Piotroski F-Score Range
Min: 4   Max: 9
Current: 5

4
9

During the past 13 years, the highest Piotroski F-Score of Procter & Gamble Co was 9. The lowest was 4. 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 3428 + 2609 + 2579 + 1990 = $10,606 Mil.
Cash Flow from Operations was 3299 + 4109 + 4506 + 3633 = $15,547 Mil.
Revenue was 22280 + 20559 + 19018 + 20792 = $82,649 Mil.
Gross Profit was 11150 + 9958 + 9099 + 10240 = $40,447 Mil.
Average Total Assets from the begining of this year (Sep13)
to the end of this year (Sep14) was
(141125 + 142927 + 143197 + 144266 + 138183) / 5 = $141939.6 Mil.
Total Assets at the begining of this year (Sep13) was $141,125 Mil.
Long-Term Debt was $19,004 Mil.
Total Current Assets was $29,107 Mil.
Total Current Liabilities was $32,071 Mil.
Net Income was 4057 + 2566 + 1875 + 3027 = $11,525 Mil.

Revenue was 22175 + 20598 + 19069 + 20830 = $82,672 Mil.
Gross Profit was 11295 + 10254 + 9252 + 10256 = $41,057 Mil.
Average Total Assets from the begining of last year (Sep12)
to the end of last year (Sep13) was
(135888 + 139903 + 139131 + 139263 + 141125) / 5 = $139062 Mil.
Total Assets at the begining of last year (Sep12) was $135,888 Mil.
Long-Term Debt was $18,480 Mil.
Total Current Assets was $26,322 Mil.
Total Current Liabilities was $33,217 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.

Procter & Gamble Co's current net income (TTM) was 10,606. ==> 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.

Procter & Gamble Co's current cash flow from operations (TTM) was 15,547. ==> 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)
=10606/141125
=0.07515323

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=11525/135888
=0.08481249

Procter & Gamble Co's return on assets of this year was 0.07515323. Procter & Gamble Co's return on assets of last year was 0.08481249. ==> Last year is higher ==> Score 0.

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.

Procter & Gamble Co's current net income (TTM) was 10,606. Procter & Gamble Co's current cash flow from operations (TTM) was 15,547. ==> 15,547 > 10,606 ==> 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
=19004/141939.6
=0.13388794

Gearing (Last Year: Sep13)=Long-Term Debt/Average Total Assets from Sep12 to Sep13
=18480/139062
=0.13289037

Procter & Gamble Co's gearing of this year was 0.13388794. Procter & Gamble Co's gearing of last year was 0.13289037. ==> 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: Sep14)=Total Current Assets/Total Current Liabilities
=29107/32071
=0.90758006

Current Ratio (Last Year: Sep13)=Total Current Assets/Total Current Liabilities
=26322/33217
=0.79242557

Procter & Gamble Co's current ratio of this year was 0.90758006. Procter & Gamble Co's current ratio of last year was 0.79242557. ==> 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 0 if there is larger number of shares in issue this year, 1 otherwise.

Procter & Gamble Co's number of shares in issue this year was 2888. Procter & Gamble Co's number of shares in issue last year was 2924.3. ==> 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: TTM)=Gross Profit/Revenue
=40447/82649
=0.48938281

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=41057/82672
=0.49662522

Procter & Gamble Co's gross margin of this year was 0.48938281. Procter & Gamble Co's gross margin of last year was 0.49662522. ==> 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)
=82649/141125
=0.58564393

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=82672/135888
=0.60838337

Procter & Gamble Co's asset turnover of this year was 0.58564393. Procter & Gamble Co's asset turnover of last year was 0.60838337. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+1+0+1+1+0+0
=5

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

Procter & Gamble Co 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.

Procter & Gamble Co Annual Data

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
Q1 1111111111
Q2 1111111111
Q3 0101110010
Q4 1111111111
Q5 1011100111
Q6 1101011101
Q7 1001111111
Q8 0110010010
Q9 0101011010
F-score 6758686686

Procter & Gamble Co Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 1111111111
Q2 1111111111
Q3 0011110000
Q4 1111111111
Q5 1001111100
Q6 1111000011
Q7 1111011111
Q8 0001110000
Q9 0001110000
F-score 6569785555
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