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Xerox Corporation (NYSE:XRX)
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

Xerox Corporation has an F-score of 6 indicating the company's financial situation is typical for a stable company.

XRX' s 10-Year Piotroski F-Score Range
Min: 4   Max: 7
Current: 6

4
7

During the past 13 years, the highest Piotroski F-Score of Xerox Corporation was 7. 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 (Dec13) TTM:Last Year (Dec12) TTM:
Net Income was 306 + 286 + 271 + 296 = $1,159 Mil.
Cash Flow from Operations was 968 + 961 + 533 + -87 = $2,375 Mil.
Revenue was 5569 + 5262 + 5402 + 5356 = $21,589 Mil.
Gross Profit was 1709 + 1655 + 1698 + 1650 = $6,712 Mil.
Total Assets at the begining of this year (Dec12) was $30,015 Mil.
Total Assets was $29,036 Mil.
Long-Term Debt was $6,904 Mil.
Total Current Assets was $8,511 Mil.
Total Current Liabilities was $5,686 Mil.
Net Income was 335 + 282 + 309 + 269 = $1,195 Mil.

Revenue was 5763 + 5275 + 5368 + 5503 = $21,909 Mil.
Gross Profit was 1847 + 1661 + 1751 + 1761 = $7,020 Mil.
Total Assets at the begining of last year (Dec11) was $30,116 Mil.
Total Assets was $30,015 Mil.
Long-Term Debt was $7,447 Mil.
Total Current Assets was $8,273 Mil.
Total Current Liabilities was $5,910 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.

Xerox Corporation's current net income was 1,159. ==> 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.

Xerox Corporation's current cash flow from operations was 2,375. ==> 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/Total Assets at the beginning of this year (Dec12)
=1159/30015
=0.03861403

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Dec11)
=1195/30116
=0.0396799

Xerox Corporation's return on assets of this year was 0.03861403. Xerox Corporation's return on assets of last year was 0.0396799. ==> 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.

Xerox Corporation's current net income was 1,159. Xerox Corporation's current cash flow from operations was 2,375. ==> 2,375 > 1,159 ==> 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 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=6904/29036
=0.2377738

Gearing (Last Year)=Long-Term Debt/Total Assets
=7447/30015
=0.24810928

Xerox Corporation's gearing of this year was 0.2377738. Xerox Corporation's gearing of last year was 0.24810928. ==> This year is lower. ==> 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)=Total Current Assets/Total Current Liabilities
=8511/5686
=1.49683433

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=8273/5910
=1.3998308

Xerox Corporation's current ratio of this year was 1.49683433. Xerox Corporation's current ratio of last year was 1.3998308. ==> 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 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

Xerox Corporation's number of shares in issue this year was 1243.3. Xerox Corporation's number of shares in issue last year was 1269.7. ==> There is the same number of shares in issue this year, or fewer. ==> 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)=Gross Profit/Revenue
=6712/21589
=0.31089907

Gross Margin (Last Year)=Gross Profit/Revenue
=7020/21909
=0.32041627

Xerox Corporation's gross margin of this year was 0.31089907. Xerox Corporation's gross margin of last year was 0.32041627. ==> Last year's gross margin is higher ==> Score 0.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales 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/Total Assets at the beginning of this year (Dec12)
=21589/30015
=0.7192737

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Dec11)
=21909/30116
=0.72748705

Xerox Corporation's asset turnover of this year was 0.7192737. Xerox Corporation's asset turnover of last year was 0.72748705. ==> 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+1+1+1+0+0
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

Xerox Corporation 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 own currency.

Xerox Corporation Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1111111111
Q2 1111111111
Q3 1110011100
Q4 1111111111
Q5 0110001101
Q6 1101010011
Q7 0011110011
Q8 0000110000
Q9 1011001000
F-score 6676576556

Xerox Corporation Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
Q1 1111111111
Q2 1111111111
Q3 1111100000
Q4 1111111111
Q5 1100001111
Q6 0011110011
Q7 0111111111
Q8 0000000000
Q9 0010000100
F-score 5676655666
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