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Honda Motor Co Ltd (NYSE:HMC)
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

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

HMC' s Piotroski F-Score Range Over the Past 10 Years
Min: 1   Max: 7
Current: 5

1
7

During the past 13 years, the highest Piotroski F-Score of Honda Motor Co Ltd was 7. The lowest was 1. And the median was 5.


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 (Mar17) TTM:Last Year (Mar16) TTM:
Net Income was 1658.25825883 + 1739.91470197 + 1455.32556137 + 849.822656565 = $5,703 Mil.
Cash Flow from Operations was 1626.81097171 + 2168.89048704 + 570.104165499 + 3779.7576085 = $8,146 Mil.
Revenue was 32953.9662215 + 32057.6749066 + 30182.1150519 + 33329.3539917 = $128,523 Mil.
Gross Profit was 7537.38221505 + 7271.22945287 + 6589.24585834 + 7393.47216749 = $28,791 Mil.
Average Total Assets from the begining of this year (Mar16)
to the end of this year (Mar17) was
(161418.751334 + 162339.961025 + 166906.349997 + 162690.742348 + 167895.064052) / 5 = $164250.173751 Mil.
Total Assets at the begining of this year (Mar16) was $161,419 Mil.
Long-Term Debt was $35,621 Mil.
Total Current Assets was $58,056 Mil.
Total Current Liabilities was $48,078 Mil.
Net Income was 1503.71084057 + 1063.28382756 + 1020.98080322 + -827.438177235 = $2,761 Mil.

Revenue was 29945.0688902 + 30140.2358432 + 29738.3401159 + 32390.2766008 = $122,214 Mil.
Gross Profit was 6620.7991361 + 6596.65278374 + 6804.10243762 + 7344.67824358 = $27,366 Mil.
Average Total Assets from the begining of last year (Mar15)
to the end of last year (Mar16) was
(153045.50457 + 152753.93514 + 152498.002457 + 152819.870925 + 161418.751334) / 5 = $154507.212885 Mil.
Total Assets at the begining of last year (Mar15) was $153,046 Mil.
Long-Term Debt was $33,088 Mil.
Total Current Assets was $55,269 Mil.
Total Current Liabilities was $48,439 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.

Honda Motor Co Ltd's current net income (TTM) was 5,703. ==> 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.

Honda Motor Co Ltd's current cash flow from operations (TTM) was 8,146. ==> 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 (Mar16)
=5703.32117873/161418.751334
=0.03533246

ROA (Last Year)=Net Income (TTM)/Total Assets at the Beginning of Last Year (Mar15)
=2760.53729412/153045.50457
=0.01803736

Honda Motor Co Ltd's return on assets of this year was 0.03533246. Honda Motor Co Ltd's return on assets of last year was 0.01803736. ==> 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.

Honda Motor Co Ltd's current net income (TTM) was 5,703. Honda Motor Co Ltd's current cash flow from operations (TTM) was 8,146. ==> 8,146 > 5,703 ==> 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: Mar17)=Long-Term Debt/Average Total Assets from Mar16 to Mar17
=35620.9234257/164250.173751
=0.21686993

Gearing (Last Year: Mar16)=Long-Term Debt/Average Total Assets from Mar15 to Mar16
=33087.5033317/154507.212885
=0.2141486

Honda Motor Co Ltd's gearing of this year was 0.21686993. Honda Motor Co Ltd's gearing of last year was 0.2141486. ==> Last year is lower than this year ==> Score 0.

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: Mar17)=Total Current Assets/Total Current Liabilities
=58055.8820013/48078.3764994
=1.20752584

Current Ratio (Last Year: Mar16)=Total Current Assets/Total Current Liabilities
=55269.0342924/48439.4638529
=1.14099187

Honda Motor Co Ltd's current ratio of this year was 1.20752584. Honda Motor Co Ltd's current ratio of last year was 1.14099187. ==> 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.

Honda Motor Co Ltd's number of shares in issue this year was 1802.4. Honda Motor Co Ltd's number of shares in issue last year was 1802.3. ==> 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
=28791.3296938/128523.110172
=0.22401675

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=27366.232601/122213.92145
=0.22392075

Honda Motor Co Ltd's gross margin of this year was 0.22401675. Honda Motor Co Ltd's gross margin of last year was 0.22392075. ==> 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 (Mar16)
=128523.110172/161418.751334
=0.79620929

Asset Turnover (Last Year)=Revenue (TTM)/Total Assets at the Beginning of Last Year (Mar15)
=122213.92145/153045.50457
=0.7985463

Honda Motor Co Ltd's asset turnover of this year was 0.79620929. Honda Motor Co Ltd's asset turnover of last year was 0.7985463. ==> 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+0+1+0+1+0
=6

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

Honda Motor 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.

Honda Motor Co Ltd Annual Data

Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16Mar17
Question 1 1111111111
Question 2 1111111111
Question 3 0011011001
Question 4 1111110111
Question 5 1101000000
Question 6 0010100101
Question 7 1110111100
Question 8 0001010001
Question 9 0001011010
F-score 5567575546

Honda Motor Co Ltd Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
Question 1 1111111111
Question 2 1111111111
Question 3 1000000001
Question 4 0111111111
Question 5 1010001110
Question 6 0101000001
Question 7 1111001110
Question 8 0001101111
Question 9 1000011110
F-score 6556447776
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