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Microsoft Corp  (NAS:MSFT) Piotroski F-Score: 7 (As of Today)

Good Sign:

Piotroski F-Score of 7 is 7, indicating very healthy situation.

The zones of discrimination were as such:

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

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

NAS:MSFT' s Piotroski F-Score Range Over the Past 10 Years
Min: 2   Max: 9
Current: 7

2
9

During the past 13 years, the highest Piotroski F-Score of Microsoft Corp was 9. The lowest was 2. And the median was 6.


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.

Microsoft Corp Annual Data

Jun08 Jun09 Jun10 Jun11 Jun12 Jun13 Jun14 Jun15 Jun16 Jun17
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 6.00 4.00 4.00 5.00 7.00

Microsoft Corp Quarterly Data

Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17
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 5.00 6.00 5.00 5.00 7.00

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.

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 (Jun17) TTM:Last Year (Jun16) TTM:
Net Income was 4690 + 5200 + 4801 + 6513 = $21,204 Mil.
Cash Flow from Operations was 11549 + 6293 + 10660 + 11005 = $39,507 Mil.
Revenue was 20453 + 24090 + 22090 + 23317 = $89,950 Mil.
Gross Profit was 12609 + 14189 + 14030 + 14861 = $55,689 Mil.
Average Total Assets from the begining of this year (Jun16)
to the end of this year (Jun17) was
(193468 + 212524 + 224610 + 225017 + 241086) / 5 = $219341 Mil.
Total Assets at the begining of this year ({FiscalYear0}) was $193,468 Mil.
Long-Term Debt & Capital Lease Obligation was $76,073 Mil.
Total Current Assets was $159,851 Mil.
Total Current Liabilities was $64,527 Mil.
Total Assets was 4902 + 5018 + 3756 + 3122 = $16,798 Mil.

Revenue was 20379 + 23796 + 20531 + 20614 = $85,320 Mil.
Gross Profit was 13172 + 13924 + 12809 + 12635 = $52,540 Mil.
Average Total Assets from the begining of last year (Jun15)
to the end of last year (Jun16) was
(174472 + 172896 + 180098 + 181869 + 193468) / 5 = $180560.6 Mil.
Total Assets at the begining of last year (Jun15) was $174,472 Mil.
Long-Term Debt & Capital Lease Obligation was $40,557 Mil.
Total Current Assets was $139,660 Mil.
Total Current Liabilities was $59,357 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.

Microsoft 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.

Microsoft Corp's current Cash Flow from Operations (TTM) was 39,507. ==> 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(Jun16)
=21204/193468
=0.10959952

ROA (Last Year)=Net Income/Total Assets(Jun15)
=16798/174472
=0.09627906

Microsoft Corp's return on assets of this year was 0.10959952. Microsoft Corp's return on assets of last year was 0.09627906. ==> 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.

Microsoft Corp's current Net Income (TTM) was 21,204. Microsoft Corp's current Cash Flow from Operations (TTM) was 39,507. ==> 39,507 > 21,204 ==> 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: Jun17)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Jun16 to Jun17
=76073/219341
=0.34682526

Gearing (Last Year: Jun16)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Jun15 to Jun16
=40557/180560.6
=0.22461711

Microsoft Corp's gearing of this year was 0.34682526. Microsoft Corp's gearing of last year was 0.22461711. ==> 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: Jun17)=Total Current Assets/Total Current Liabilities
=159851/64527
=2.47727308

Current Ratio (Last Year: Jun16)=Total Current Assets/Total Current Liabilities
=139660/59357
=2.35288172

Microsoft Corp's current ratio of this year was 2.47727308. Microsoft Corp's current ratio of last year was 2.35288172. ==> 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.

Microsoft Corp's number of shares in issue this year was 7808. Microsoft Corp's number of shares in issue last year was 7929. ==> 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
=55689/89950
=0.61911062

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=52540/85320
=0.61579934

Microsoft Corp's gross margin of this year was 0.61911062. Microsoft Corp's gross margin of last year was 0.61579934. ==> 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 (Jun16)
=89950/193468
=0.46493477

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Jun15)
=85320/174472
=0.4890183

Microsoft Corp's asset turnover of this year was 0.46493477. Microsoft Corp's asset turnover of last year was 0.4890183. ==> 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+1+1+0
=7

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

Microsoft 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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