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Transocean Ltd (NYSE:RIG)
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

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

RIG' 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 Transocean Ltd 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 233 + 456 + 587 + -2217 = $-941 Mil.
Cash Flow from Operations was 773 + 136 + 636 + 882 = $2,427 Mil.
Revenue was 2487 + 2339 + 2328 + 2270 = $9,424 Mil.
Gross Profit was 798 + 1070 + 1115 + 952 = $3,935 Mil.
Average Total Assets from the begining of this year (Sep13)
to the end of this year (Sep14) was
(32601 + 32546 + 31897 + 32067 + 29964) / 5 = $31815 Mil.
Total Assets at the begining of this year (Sep13) was $32,601 Mil.
Long-Term Debt was $9,991 Mil.
Total Current Assets was $6,367 Mil.
Total Current Liabilities was $3,546 Mil.
Net Income was 456 + 321 + 307 + 546 = $1,630 Mil.

Revenue was 2326 + 2184 + 2364 + 2449 = $9,323 Mil.
Gross Profit was 888 + 828 + 1007 + 1063 = $3,786 Mil.
Average Total Assets from the begining of last year (Sep12)
to the end of last year (Sep13) was
(35312 + 34255 + 32675 + 32215 + 32601) / 5 = $33411.6 Mil.
Total Assets at the begining of last year (Sep12) was $35,312 Mil.
Long-Term Debt was $10,508 Mil.
Total Current Assets was $7,373 Mil.
Total Current Liabilities was $3,776 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.

Transocean Ltd's current net income (TTM) was -941. ==> Negative ==> Score 0.

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.

Transocean Ltd's current cash flow from operations (TTM) was 2,427. ==> 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)
=-941/32601
=-0.02886415

Transocean Ltd's return on assets of this year was -0.02886415. Transocean Ltd's return on assets of last year was 0.04615995. ==> 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.

Transocean Ltd's current net income (TTM) was -941. Transocean Ltd's current cash flow from operations (TTM) was 2,427. ==> 2,427 > -941 ==> 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
=9991/31815
=0.31403426

Gearing (Last Year: Sep13)=Long-Term Debt/Average Total Assets from Sep12 to Sep13
=10508/33411.6
=0.31450155

Transocean Ltd's gearing of this year was 0.31403426. Transocean Ltd's gearing of last year was 0.31450155. ==> 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
=6367/3546
=1.79554428

Current Ratio (Last Year: Sep13)=Total Current Assets/Total Current Liabilities
=7373/3776
=1.95259534

Transocean Ltd's current ratio of this year was 1.79554428. Transocean Ltd's current ratio of last year was 1.95259534. ==> 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.

Transocean Ltd's number of shares in issue this year was 362. Transocean Ltd's number of shares in issue last year was 361. ==> 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: TTM)=Gross Profit/Revenue
=3935/9424
=0.41755093

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=3786/9323
=0.40609246

Transocean Ltd's gross margin of this year was 0.41755093. Transocean Ltd's gross margin of last year was 0.40609246. ==> 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 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)
=9424/32601
=0.28907089

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep12)
=9323/35312
=0.2640179

Transocean Ltd's asset turnover of this year was 0.28907089. Transocean Ltd's asset turnover of last year was 0.2640179. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

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

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

Transocean Ltd 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.

Transocean Ltd Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111001
Q2 1111111111
Q3 1111000011
Q4 1100111111
Q5 1100111001
Q6 1010101011
Q7 1011011000
Q8 1111100011
Q9 1111000011
F-score 9776656268

Transocean Ltd Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
Q1 0001111110
Q2 1111111111
Q3 0011111110
Q4 1111111111
Q5 0000011101
Q6 0011111000
Q7 0000001000
Q8 0011111111
Q9 1111111111
F-score 3367789765
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