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Broadcom Corp  (NAS:BRCM) Piotroski F-Score: 0 (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

Broadcom Corp has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.


Historical Data

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

* Premium members only.

Broadcom Corp Annual Data

Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 7.00 4.00 4.00 6.00 6.00

Broadcom Corp Quarterly Data

Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 4.00 6.00 6.00 6.00 7.00

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 (Sep15) TTM:Last Year (Sep14) TTM:
Net Income was 390 + 209 + 386 + 429 = $1,414 Mil.
Cash Flow from Operations was 633 + -25 + 802 + 483 = $1,893 Mil.
Revenue was 2143 + 2058 + 2096 + 2187 = $8,484 Mil.
Gross Profit was 1131 + 1086 + 1157 + 1172 = $4,546 Mil.
Average Total Assets from the begining of this year (Sep14)
to the end of this year (Sep15) was
(12215 + 12471 + 12062 + 12990 + 13235) / 5 = $12594.6 Mil.
Total Assets at the begining of this year ({FiscalYear0}) was $12,215 Mil.
Long-Term Debt & Capital Lease Obligation was $1,594 Mil.
Total Current Assets was $5,113 Mil.
Total Current Liabilities was $1,421 Mil.
Total Assets was 168 + 165 + -1 + 98 = $430 Mil.

Revenue was 2064 + 1984 + 2041 + 2260 = $8,349 Mil.
Gross Profit was 1038 + 980 + 1036 + 1183 = $4,237 Mil.
Average Total Assets from the begining of last year (Sep13)
to the end of last year (Sep14) was
(11345 + 11495 + 11907 + 11971 + 12215) / 5 = $11786.6 Mil.
Total Assets at the begining of last year (Sep13) was $11,345 Mil.
Long-Term Debt & Capital Lease Obligation was $1,593 Mil.
Total Current Assets was $5,024 Mil.
Total Current Liabilities was $1,711 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.

Broadcom Corp's current Net Income (TTM) was {NetIncome0_f}. ==> 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.

Broadcom Corp's current Cash Flow from Operations (TTM) was 1,893. ==> 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/Total Assets(Sep14)
=1414/12215
=0.11575931

ROA (Last Year)=Net Income/Total Assets(Sep13)
=430/11345
=0.03790216

Broadcom Corp's return on assets of this year was 0.11575931. Broadcom Corp's return on assets of last year was 0.03790216. ==> This year is higher. ==> Score 1.

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.

Broadcom Corp's current Net Income (TTM) was 1,414. Broadcom Corp's current Cash Flow from Operations (TTM) was 1,893. ==> 1,893 > 1,414 ==> 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: Sep15)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Sep14 to Sep15
=1594/12594.6
=0.12656218

Gearing (Last Year: Sep14)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Sep13 to Sep14
=1593/11786.6
=0.13515348

Broadcom Corp's gearing of this year was 0.12656218. Broadcom Corp's gearing of last year was 0.13515348. ==> 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: Sep15)=Total Current Assets/Total Current Liabilities
=5113/1421
=3.5981703

Current Ratio (Last Year: Sep14)=Total Current Assets/Total Current Liabilities
=5024/1711
=2.93629456

Broadcom Corp's current ratio of this year was 3.5981703. Broadcom Corp's current ratio of last year was 2.93629456. ==> This year's current ratio is higher. ==> Score 1.

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.

Broadcom Corp's number of shares in issue this year was 620. Broadcom Corp's number of shares in issue last year was 607. ==> There is larger number of shares in issue this year. ==> Score 0.

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
=4546/8484
=0.53583215

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=4237/8349
=0.50748593

Broadcom Corp's gross margin of this year was 0.53583215. Broadcom Corp's gross margin of last year was 0.50748593. ==> 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/Total Assets at the Beginning of This Year (Sep14)
=8484/12215
=0.69455587

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Sep13)
=8349/11345
=0.73591891

Broadcom Corp's asset turnover of this year was 0.69455587. Broadcom Corp's asset turnover of last year was 0.73591891. ==> 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+1+1+1+1+0+1+0
=7

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

Broadcom Corp has an F-score of 7. It is a good or high score, which usually indicates a very healthy situation.

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.


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