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PPG Industries Inc (NYSE:PPG)
Piotroski F-Score
5 (As of Today)

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

PPG Industries Inc has an F-score of 5 indicating the company's financial situation is typical for a stable company.

PPG' s 10-Year Piotroski F-Score Range
Min: 3   Max: 9
Current: 5

3
9

During the past 13 years, the highest Piotroski F-Score of PPG Industries Inc 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 (Sep14) TTM:Last Year (Sep13) TTM:
Net Income was 254 + 1262 + 386 + 371 = $2,273 Mil.
Cash Flow from Operations was 509 + 163 + 238 + 636 = $1,546 Mil.
Revenue was 3702 + 3636 + 4082 + 3935 = $15,355 Mil.
Gross Profit was 1594 + 1545 + 1776 + 1706 = $6,621 Mil.
Average Total Assets from the begining of this year (Sep13)
to the end of this year (Sep14) was
(16638 + 15863 + 17117 + 17300 + 17087) / 5 = $16,801 Mil.
Total Assets as of Sep13 was $16,638 Mil.
Long-Term Debt was $2,954 Mil.
Total Current Assets was $8,898 Mil.
Total Current Liabilities was $4,896 Mil.
Net Income was 227 + 2410 + 341 + 226 = $3,204 Mil.

Revenue was 3648 + 3331 + 4095 + 3980 = $15,054 Mil.
Gross Profit was 1448 + 1384 + 1752 + 1742 = $6,326 Mil.
Average Total Assets from the begining of last year (Sep12)
to the end of last year (Sep13) was
(15606 + 15878 + 15376 + 16066 + 16638) / 5 = $15,913 Mil.
Total Assets as of Sep12 was $15,606 Mil.
Long-Term Debt was $3,368 Mil.
Total Current Assets was $8,120 Mil.
Total Current Liabilities was $4,362 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by beginning of the year total assets.

Score 1 if positive, 0 if negative.

PPG Industries Inc's current net income (ttm) was 2,273. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by beginning of the year total assets.

Score 1 if positive, 0 if negative.

PPG Industries Inc's current cash flow from operations (ttm) was 1,546. ==> 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)/Beginning of This Year Total Assets (Sep13)
=2273/16638
=0.13661498

ROA (Last Year)=Net Income (TTM)/Beginning of Last Year Total Assets (Sep12)
=3204/15606
=0.20530565

PPG Industries Inc's return on assets of this year was 0.13661498. PPG Industries Inc's return on assets of last year was 0.20530565. ==> 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.

PPG Industries Inc's current net income (ttm) was 2,273. PPG Industries Inc's current cash flow from operations (ttm) was 1,546. ==> 1,546 =< 2,273 ==> 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: Sep14)=Long-Term Debt/Average Total Assets from Sep13 to Sep14
=2954/16801
=0.17582287

Gearing (Last Year: Sep13)=Long-Term Debt/Average Total Assets from Sep12 to Sep13
=3368/15912.8
=0.21165351

PPG Industries Inc's gearing of this year was 0.17582287. PPG Industries Inc's gearing of last year was 0.21165351. ==> 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: Sep14)=Total Current Assets/Total Current Liabilities
=8898/4896
=1.81740196

Current Ratio (Last Year: Sep13)=Total Current Assets/Total Current Liabilities
=8120/4362
=1.86153141

PPG Industries Inc's current ratio of this year was 1.81740196. PPG Industries Inc's current ratio of last year was 1.86153141. ==> 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.

PPG Industries Inc's number of shares in issue this year was 139.7. PPG Industries Inc's number of shares in issue last year was 144.9. ==> 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
=6621/15355
=0.43119505

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=6326/15054
=0.42022054

PPG Industries Inc's gross margin of this year was 0.43119505. PPG Industries Inc's gross margin of last year was 0.42022054. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales for the year divided by begining of the year total assets) 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)/Beginning of This Year Total Assets (Sep13)
=15355/16638
=0.92288737

Asset Turnover (Last Year)=Revenue (TTM)/Beginning of Last Year Total Assets (Sep12)
=15054/15606
=0.96462899

PPG Industries Inc's asset turnover of this year was 0.92288737. PPG Industries Inc's asset turnover of last year was 0.96462899. ==> 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+0+1+0+1+1+0
=5

Good or high score = 8 or 9

Bad or low score = 0 or 1

PPG Industries Inc 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, Altman Z-Score, Beneish M-Score


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

PPG Industries Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 1011001101
Q4 1111111110
Q5 1111010111
Q6 1000011001
Q7 0111000111
Q8 0001011111
Q9 1110101110
F-score 7677467877

PPG Industries Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 1111111111
Q2 1111111111
Q3 0001111000
Q4 1110000000
Q5 1110011111
Q6 0001111000
Q7 1101111111
Q8 1111111111
Q9 0010100100
F-score 6666777655
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