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Taiwan Semiconductor Manufacturing Co Ltd (NYSE:TSM)
Piotroski F-Score
6 (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

Taiwan Semiconductor Manufacturing Co Ltd has an F-score of 6 indicating the company's financial situation is typical for a stable company.

TSM' s Piotroski F-Score Range Over the Past 10 Years
Min: 3   Max: 9
Current: 6

3
9

During the past 13 years, the highest Piotroski F-Score of Taiwan Semiconductor Manufacturing Co 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 local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Net Income was 2107.75227581 + 1987.93070328 + 2244.77773994 + 3075.99315874 = $9,416 Mil.
Cash Flow from Operations was 4412.01408945 + 3729.32032012 + 3302.67464396 + 4018.58962621 = $15,463 Mil.
Revenue was 6207.07095043 + 6244.60254577 + 6867.17789474 + 8278.73684679 = $27,598 Mil.
Gross Profit was 3016.87757125 + 2802.84950625 + 3539.75962848 + 4197.92565536 = $13,557 Mil.
Average Total Assets from the begining of this year (Sep15)
to the end of this year (Sep16) was
(48247.4115 + 50548.735091 + 52981.3865482 + 55866.6117647 + 54637.4566222) / 5 = $52456.3203052 Mil.
Total Assets at the begining of this year (Sep15) was $48,247 Mil.
Long-Term Debt was $4,837 Mil.
Total Current Assets was $22,558 Mil.
Total Current Liabilities was $8,188 Mil.
Net Income was 2245.63898839 + 2512.54559739 + 2570.29581011 + 2305.79666049 = $9,634 Mil.

Revenue was 7098.44092384 + 7062.55905236 + 6648.92297933 + 6505.2780116 = $27,315 Mil.
Gross Profit was 3526.41763338 + 3480.77383565 + 3226.8855791 + 3132.45553192 = $13,367 Mil.
Average Total Assets from the begining of last year (Sep14)
to the end of last year (Sep15) was
(44801.2860509 + 47679.8216376 + 49522.3980699 + 52069.4754387 + 48247.4115) / 5 = $48464.0785394 Mil.
Total Assets at the begining of last year (Sep14) was $44,801 Mil.
Long-Term Debt was $5,877 Mil.
Total Current Assets was $21,233 Mil.
Total Current Liabilities was $6,174 Mil.

Profitability

Question 1. 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.

Taiwan Semiconductor Manufacturing Co Ltd's current net income (TTM) was 9,416. ==> Positive ==> Score 1.

Question 2. 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.

Taiwan Semiconductor Manufacturing Co Ltd's current cash flow from operations (TTM) was 15,463. ==> Positive ==> Score 1.

Question 3. 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 (Sep15)
=9416.45387777/48247.4115
=0.19517014

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Sep14)
=9634.27705639/44801.2860509
=0.21504465

Taiwan Semiconductor Manufacturing Co Ltd's return on assets of this year was 0.19517014. Taiwan Semiconductor Manufacturing Co Ltd's return on assets of last year was 0.21504465. ==> Last year is higher ==> Score 0.

Question 4. 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.

Taiwan Semiconductor Manufacturing Co Ltd's current net income (TTM) was 9,416. Taiwan Semiconductor Manufacturing Co Ltd's current cash flow from operations (TTM) was 15,463. ==> 15,463 > 9,416 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. 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: Sep16)=Long-Term Debt/Average Total Assets from Sep15 to Sep16
=4837.30282107/52456.3203052
=0.09221582

Gearing (Last Year: Sep15)=Long-Term Debt/Average Total Assets from Sep14 to Sep15
=5877.21740461/48464.0785394
=0.12126956

Taiwan Semiconductor Manufacturing Co Ltd's gearing of this year was 0.09221582. Taiwan Semiconductor Manufacturing Co Ltd's gearing of last year was 0.12126956. ==> This year is lower or equal to last year. ==> Score 1.

Question 6. 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: Sep16)=Total Current Assets/Total Current Liabilities
=22558.0802831/8187.73761611
=2.75510542

Current Ratio (Last Year: Sep15)=Total Current Assets/Total Current Liabilities
=21232.6939806/6173.62891994
=3.4392566

Taiwan Semiconductor Manufacturing Co Ltd's current ratio of this year was 2.75510542. Taiwan Semiconductor Manufacturing Co Ltd's current ratio of last year was 3.4392566. ==> Last year's current ratio is higher ==> Score 0.

Question 7. 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.

Taiwan Semiconductor Manufacturing Co Ltd's number of shares in issue this year was 5186.1. Taiwan Semiconductor Manufacturing Co Ltd's number of shares in issue last year was 5186.1. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

Efficiency

Question 8. 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
=13557.4123613/27597.5882377
=0.49125352

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=13366.53258/27315.2009671
=0.48934411

Taiwan Semiconductor Manufacturing Co Ltd's gross margin of this year was 0.49125352. Taiwan Semiconductor Manufacturing Co Ltd's gross margin of last year was 0.48934411. ==> This year's gross margin is higher. ==> Score 1.

Question 9. 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 (Sep15)
=27597.5882377/48247.4115
=0.57200143

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Sep14)
=27315.2009671/44801.2860509
=0.60969681

Taiwan Semiconductor Manufacturing Co Ltd's asset turnover of this year was 0.57200143. Taiwan Semiconductor Manufacturing Co Ltd's asset turnover of last year was 0.60969681. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+0+1+1+0+1+1+0
=6

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

Taiwan Semiconductor Manufacturing Co Ltd 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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Taiwan Semiconductor Manufacturing Co Ltd Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Question 1 1111111111
Question 2 1111111111
Question 3 1000101011
Question 4 1111111111
Question 5 1101100011
Question 6 0100000111
Question 7 0011000011
Question 8 1001101010
Question 9 1010101000
F-score 7556736487

Taiwan Semiconductor Manufacturing Co Ltd Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
Question 1 1111111111
Question 2 1111111111
Question 3 0011111000
Question 4 1111111111
Question 5 1111111111
Question 6 1111111000
Question 7 0010001011
Question 8 1111110001
Question 9 0001110000
F-score 6688887456
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