Piotroski Score

Posted in Finance, Accounting and Economics Terms, Total Reads: 427

Definition: Piotroski Score

Piotroski Score is one of the famous screening criteria that is used to identify value stocks along with other criteria or standalone. The score was named after Chicago Accounting Professor, Joseph Piotroski who made this scale. The maximum score can be 9, hence a screening criteria of 7 or 8 can be used and then other screening criteria can be applied to identify the value stocks among the vast number of stocks that we have today in the stock exchanges. The score targets companies which are having improving margins, high profitability, and have strong balance sheets.

There are various criteria that needs to be set to get a score of 9. Let’s see how the scores are awarded and based on what criteria. For each criteria, when its met during the financial analysis, 1 point is added to the score. The final score is then used as a screener to identify the value stocks. Preferably companies with scores of 8 to 9 are considered to be strong. Investment decision is based on the portfolio requirements.

S. No.






Net Income

Positive net income in the current year

1 point


Operating Cash Flow

Positive cash flows from operations in the current year

1 point


Quality of Earnings

Cash flow from operations exceeds net income before extraordinary items

1 point


Return on Assets

ROA is higher in the current period compared to  the previous year

1 point

Leverage, Liquidity and Source of Funds


Absence of Dilution

Firm did not issue new shares/equity in the preceding year

1 point


Decrease in leverage

Lower ratio of long term debt to in the current period compared value in the previous year

1 point


Increase in liquidity

Higher current ratio this year compared to the previous year

1 point

Operating Efficiency


Asset Turnover

Higher asset turnover ratio year on year (as a measure of productivity)

1 point


Gross Margin

Higher gross margin compared to the previous year

1 point


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