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PPG Industries Inc (NYSE:PPG)
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

PPG Industries Inc has an F-score of 6 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: 6

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 (Jun14) TTM:Last Year (Jun13) TTM:
Net Income was 226 + 254 + 1262 + 386 = $2,128 Mil.
Cash Flow from Operations was 788 + 509 + 163 + 238 = $1,698 Mil.
Revenue was 3980 + 3702 + 3636 + 4082 = $15,400 Mil.
Gross Profit was 1742 + 1594 + 1545 + 1776 = $6,657 Mil.
Average Total Assets from the begining of this year (Jun13)
to the end of this year (Jun14) was
(16066 + 16638 + 15863 + 17117 + 17300) / 5 = $16,597 Mil.
Total Assets was $17,300 Mil.
Long-Term Debt was $2,958 Mil.
Total Current Assets was $9,035 Mil.
Total Current Liabilities was $4,962 Mil.
Net Income was 339 + 227 + 2410 + 341 = $3,317 Mil.

Revenue was 3408 + 3243 + 3108 + 3883 = $13,642 Mil.
Gross Profit was 1425 + 1333 + 1246 + 1620 = $5,624 Mil.
Average Total Assets from the begining of last year (Jun12)
to the end of last year (Jun13) was
(14817 + 15606 + 15878 + 15376 + 16066) / 5 = $15,549 Mil.
Total Assets was $16,066 Mil.
Long-Term Debt was $3,355 Mil.
Total Current Assets was $7,710 Mil.
Total Current Liabilities was $4,106 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

PPG Industries Inc's current net income (ttm) was 2,128. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by average total assets throughout the year.

Score 1 if positive, 0 if negative.

PPG Industries Inc's current cash flow from operations (ttm) was 1,698. ==> 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)/Average Total Assets from Jun13 to Jun14
=2128/16596.8
=0.12821749

ROA (Last Year)=Net Income (TTM)/Average Total Assets from Jun12 to Jun13
=3317/15548.6
=0.2133311

PPG Industries Inc's return on assets of this year was 0.12821749. PPG Industries Inc's return on assets of last year was 0.2133311. ==> 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 2,128. PPG Industries Inc's current cash flow from operations (ttm) was 1,698. ==> 1,698 =< 2,128 ==> CFROA =< ROA ==> Score 0.

Funding

Q5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by total assets) to last year’s gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Jun14)=Long-Term Debt/Total Assets
=2958/17300
=0.17098266

Gearing (Last Year: Jun13)=Long-Term Debt/Total Assets
=3355/16066
=0.20882609

PPG Industries Inc's gearing of this year was 0.17098266. PPG Industries Inc's gearing of last year was 0.20882609. ==> 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: Jun14)=Total Current Assets/Total Current Liabilities
=9035/4962
=1.82083837

Current Ratio (Last Year: Jun13)=Total Current Assets/Total Current Liabilities
=7710/4106
=1.87773989

PPG Industries Inc's current ratio of this year was 1.82083837. PPG Industries Inc's current ratio of last year was 1.87773989. ==> 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 140.1. PPG Industries Inc's number of shares in issue last year was 143.4. ==> 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
=6657/15400
=0.43227273

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=5624/13642
=0.41225627

PPG Industries Inc's gross margin of this year was 0.43227273. PPG Industries Inc's gross margin of last year was 0.41225627. ==> 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 average total assets throughout 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)/Average Total Assets from Jun13 to Jun14
=15400/16596.8
=0.92788971

Asset Turnover (Last Year)=Revenue (TTM)/Average Total Assets from Jun12 to Jun13
=13642/15548.6
=0.87737803

PPG Industries Inc's asset turnover of this year was 0.92788971. PPG Industries Inc's asset turnover of last year was 0.87737803. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+0+0+1+0+1+1+1
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

PPG Industries Inc 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, 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 1011000110
Q6 1010111001
Q7 0111000111
Q8 0100011111
Q9 1011101101
F-score 7587557867

PPG Industries Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 111111111
Q2 111111111
Q3 000111100
Q4 111000000
Q5 111001011
Q6 000111100
Q7 110111111
Q8 111111111
Q9 000000111
F-score 6656677660
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