Piotroski F-Score: measuring a company's financial health

The Piotroski F-Score is a score from 0 to 9 that measures a company's financial strength through nine simple accounting tests, each worth one point. A score of 8 or 9 means the accounts are improving on almost every front; a score of 0 to 2 means they are deteriorating. It says nothing about the share price: it is a quality filter, not a valuation.

Where does the Piotroski F-Score come from?

Joseph Piotroski, then a professor at the University of Chicago, published it in 2000 in the Journal of Accounting Research. His question was precise: among "value" stocks — those that trade cheaply relative to their book equity — how do you tell the companies about to recover from those that are cheap because they are declining?

His answer is nine yes-or-no questions asked of the last two financial years. Over the 1976–1996 period of his study, picking the value stocks with the best scores would have raised the average return of a value portfolio by at least 7.5 percentage points a year. That result belongs to one sample and one period: it guarantees nothing for the future, and the edge has shrunk since the method became well known.

What are the 9 criteria of the F-Score?

The tests fall into three groups. Each compares the latest financial year (Y) with the previous one (Y-1).

The fourth test deserves attention. A company whose reported profit keeps running ahead of the cash it actually collects is often flattering its earnings through accounting entries (released provisions, receivables that stretch out). The F-Score takes a point away.

A worked example: a fictitious company

Take Company A, a fictitious industrial business, with its 2024 and 2025 accounts (in € millions).

Company A scores 7 out of 9: rising profitability, earnings backed by cash, falling debt. The two lost points still say something useful: short-term liquidity is a little tighter and the assets turn slightly more slowly. Nothing alarming, but worth checking in the next set of accounts.

How to read the score

These thresholds are markers, not natural boundaries. A 6 that becomes an 8 in a year tells a different story from an 8 that falls to 6: the trend matters as much as the level.

What are the limits of the F-Score?

• Fast growers score badly. A company that reinvests heavily, raises capital and grows its assets mechanically loses points (dilution, asset turnover, leverage) even when its business is sound.
• Banks and insurers do not fit. Their balance sheets are made of debt by design; current ratio and gross margin do not mean the same thing.
• The score is binary. A gross margin up 0.1 point earns as much as one up 5 points.
• It looks backwards. It reads the last two published years, so data that can be more than a year old.
• It ignores the price. A company at 9 out of 9 can be very expensive; one at 3 may already have every piece of bad news in its share price.

What the scores look like in our universe

On 7 November 2026, across the 481 non-financial companies in the universe InvestIQ follows:

The most common score is 7 (128 companies); only 22 score 9. Among large listed companies, a 7 is nothing exceptional: the trend and the points lost are what carry information. These figures are updated monthly, sector by sector, on the stock market statistics page.

Piotroski or Altman?

The two scores are often quoted together, but they answer different questions.

They complement each other: a company can improve its accounts (high Piotroski) while staying fragile (Altman in the distress zone), for example after a restructuring. See the article on the Altman Z-Score.

Source: Piotroski, J. (2000), "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers", Journal of Accounting Research, vol. 38, pp. 1–41 (doi:10.2307/2672906).

How InvestIQ uses the Piotroski F-Score

In InvestIQ's scoring engine the F-Score is not one factor among others: it works as a multiplier on the overall score, from ×0.85 for an F-Score of 0 or 1 to ×1.08 for an F-Score of 8 or 9. It is set to neutral (×1.00) when unavailable, for banks, insurers and real-estate trusts, and when revenue grew by more than 35% in a year, so that strong growth is not penalised. The details are in the methodology.

That choice reflects the sturdiest use of the F-Score: weighting an analysis by the quality of the accounts rather than deciding on its own. It pairs well with other risk measures such as the Altman Z-Score, and with a look at valuation, for instance the P/E ratio.

In short

The Piotroski F-Score answers a simple question: are this company's accounts getting better? Nine tests, one point each, built from public documents. It is an excellent first filter, as long as its blind spots are known: fast growth, the financial sector, and complete indifference to the price paid.

Educational guidance only, not investment advice.