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Electronic Arts Piotroski F-Score

: 6 (As of Today)
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The zones of discrimination were as such:

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

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

NAS:EA' s Piotroski F-Score Range Over the Past 10 Years
Min: 2   Med: 6   Max: 9
Current: 6

2
9

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


Electronic Arts Piotroski F-Score 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.

Electronic Arts Annual Data
Mar11 Mar12 Mar13 Mar14 Mar15 Mar16 Mar17 Mar18 Mar19 Mar20
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 7.00 7.00 7.00 6.00 7.00

Electronic Arts Quarterly Data
Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20
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 6.00 5.00 7.00 6.00 6.00

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.


Electronic Arts Piotroski F-Score Distribution

* The bar in red indicates where Electronic Arts's Piotroski F-Score falls into.


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 (Sep20) TTM:Last Year (Sep19) TTM:
Net Income was 346 + 418 + 365 + 185 = $1,314 Mil.
Cash Flow from Operations was 1104 + 498 + 378 + 61 = $2,041 Mil.
Revenue was 1593 + 1387 + 1459 + 1151 = $5,590 Mil.
Gross Profit was 1085 + 1118 + 1171 + 865 = $4,239 Mil.
Average Total Assets from the begining of this year (Sep19)
to the end of this year (Sep20) was
(10593 + 11161 + 11112 + 11284 + 11470) / 5 = $11124 Mil.
Total Assets at the begining of this year (Sep19) was $10,593 Mil.
Long-Term Debt & Capital Lease Obligation was $397 Mil.
Total Current Assets was $6,830 Mil.
Total Current Liabilities was $2,485 Mil.
Net Income was 262 + 209 + 1421 + 854 = $2,746 Mil.

Revenue was 1289 + 1238 + 1209 + 1348 = $5,084 Mil.
Gross Profit was 876 + 962 + 1022 + 943 = $3,803 Mil.
Average Total Assets from the begining of last year (Sep18)
to the end of last year (Sep19) was
(8450 + 8857 + 8957 + 9749 + 10593) / 5 = $9321.2 Mil.
Total Assets at the begining of last year (Sep18) was $8,450 Mil.
Long-Term Debt & Capital Lease Obligation was $995 Mil.
Total Current Assets was $6,040 Mil.
Total Current Liabilities was $1,818 Mil.

*Note: If the latest quarterly/semi-annual/annual total assets data is 0, then we will use previous quarterly/semi-annual/annual data for all the items in the balance sheet.

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.

Electronic Arts's current Net Income (TTM) was 1,314. ==> 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.

Electronic Arts's current Cash Flow from Operations (TTM) was 2,041. ==> 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 (Sep19)
=1314/10593
=0.12404418

ROA (Last Year)=Net Income/Total Assets (Sep18)
=2746/8450
=0.32497041

Electronic Arts's return on assets of this year was 0.12404418. Electronic Arts's return on assets of last year was 0.32497041. ==> 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.

Electronic Arts's current Net Income (TTM) was 1,314. Electronic Arts's current Cash Flow from Operations (TTM) was 2,041. ==> 2,041 > 1,314 ==> 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: Sep20)=Long-Term Debt & Capital Lease Obligation/Average Total Assets from Sep19 to Sep20
=397/11124
=0.0356886

Gearing (Last Year: Sep19)=Long-Term Debt & Capital Lease Obligation/Average Total Assets from Sep18 to Sep19
=995/9321.2
=0.10674591

Electronic Arts's gearing of this year was 0.0356886. Electronic Arts's gearing of last year was 0.10674591. ==> 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: Sep20)=Total Current Assets/Total Current Liabilities
=6830/2485
=2.74849095

Current Ratio (Last Year: Sep19)=Total Current Assets/Total Current Liabilities
=6040/1818
=3.32233223

Electronic Arts's current ratio of this year was 2.74849095. Electronic Arts's current ratio of last year was 3.32233223. ==> 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.

Electronic Arts's number of shares in issue this year was 293. Electronic Arts's number of shares in issue last year was 296. ==> 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
=4239/5590
=0.75831843

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=3803/5084
=0.74803304

Electronic Arts's gross margin of this year was 0.75831843. Electronic Arts's gross margin of last year was 0.74803304. ==> 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 (Sep19)
=5590/10593
=0.52770698

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Sep18)
=5084/8450
=0.6016568

Electronic Arts's asset turnover of this year was 0.52770698. Electronic Arts's asset turnover of last year was 0.6016568. ==> 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

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

Electronic Arts  (NAS:EA) Piotroski F-Score 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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