Financial Ratio Analyzer: Piotroski, Altman & DuPont
Read a company’s statements: DuPont, Piotroski F, Altman Z and Beneish M.
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- Free preview: the DuPont return on equity in full, with the first rows of each table and the first step of the working; every other figure is hidden.
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The scores apply published models to the figures you enter. They are not ratings of the company or opinions on its shares.
DuPont, in three and five steps
Piotroski F-score: the nine signals
Altman Z-scores and Altman’s zones
Beneish M-score and its eight indices
How this was calculated
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About the Financial Ratio Analyzer: Piotroski, Altman & DuPont
Enter the figures of a company’s income statement, balance sheet and cash-flow statement — this year’s and last year’s — and the analyzer works out the ratios analysts read first: the DuPont return on equity in three and five steps, margins, return on capital, liquidity, interest cover and cash conversion. It then applies four published models to the same figures: Piotroski’s F-score (nine signals of profitability, funding and efficiency), Altman’s Z-score with its private-company (Z′) and non-manufacturer (Z″) versions, and Beneish’s M-score (eight indices that compare the two years).
The scores apply published models to the figures you enter. They are not ratings of the company or opinions on its shares: each model’s cut-offs are shown as its author’s, with what they meant in the author’s own study.
It works with any company’s accounts, in any currency, from the annual reports you read. Nothing is looked up and nothing you type leaves your browser.
How to use it
- From the company’s annual report, type this year’s figures — revenue, cost of sales, operating profit, net income, total assets, equity and the rest — and last year’s, for the scores that compare two years; or try the example of a fictional company.
- For the Piotroski F-score, add total assets two years ago, and say whether new shares were issued during the year.
- Read the DuPont return on equity, the ratios, each Piotroski signal, the three Altman scores with their zones and the Beneish M-score.
- Copy the summary or download every figure as CSV — with a pass, or after unlocking this result.
Examples
Net income 100, revenue 1,000, total assets 2,000, equity 800
ROE 12.5% = net margin 10% × asset turnover 0.5 × equity multiplier 2.5
X1 0.2 (working capital ÷ assets), X2 0.3, X3 0.1, X4 1.5 (market value of equity ÷ liabilities), X5 1.2
Z = 3.09: above Altman’s 2.99, in what he called the safe zone
The same X1 to X3; X4 1.5 with the book value of equity
Z″ = 4.537; the emerging-market score (Z″ + 3.25) 7.787
DSRI 1.05, GMI 1.02, AQI 1.00, SGI 1.10, DEPI 1.00, SGAI 0.98, TATA 0.02, LVGI 1.01
M = −2.2405: below Beneish’s −1.78 cut-off
Common uses
- Break a return on equity into margins, asset use and leverage before comparing two companies.
- Apply Piotroski’s nine signals to the last two annual reports of a company you follow.
- Work out the Altman Z-score of a supplier or customer from its published accounts.
- Check a set of accounts against Beneish’s indices before reading the notes more closely.
The formulas
- DuPont: ROE = net income ÷ revenue × revenue ÷ total assets × total assets ÷ equity; five steps: net income ÷ profit before tax × profit before tax ÷ EBIT × EBIT ÷ revenue × asset turnover × equity multiplier. Year-end figures.
- ROCE = EBIT ÷ (total assets − current liabilities); interest cover = EBIT ÷ interest; cash conversion = cash from operations ÷ net income.
- Piotroski F-score (Piotroski, Journal of Accounting Research): one point each for a positive return on assets and positive cash from operations (both over total assets at the start of the year), a higher return on assets than last year, cash from operations above net income, lower long-term debt over average assets, a higher current ratio, no new common shares, a higher gross margin and a higher asset turnover. In his study, scores of 8–9 formed the high group and 0–1 the low group.
- Altman Z (Altman, Journal of Finance, and his later papers revisiting it) = 1.2 X1 + 1.4 X2 + 3.3 X3 + 0.6 X4 + 1.0 X5, with X1 working capital, X2 retained earnings, X3 EBIT, X5 revenue, each ÷ total assets, and X4 the market value of equity ÷ total liabilities. Altman’s zones: above 2.99 “safe”, 1.81–2.99 “grey”, below 1.81 “distress”. Z′ (private firms, book equity) = 0.717 X1 + 0.847 X2 + 3.107 X3 + 0.420 X4 + 0.998 X5, zones 2.90 and 1.23. Z″ (non-manufacturers and emerging markets) = 6.56 X1 + 3.26 X2 + 6.72 X3 + 1.05 X4, zones 2.60 and 1.10; + 3.25 gives the emerging-market score.
- Beneish M-score (Beneish, Financial Analysts Journal) = −4.84 + 0.920 DSRI + 0.528 GMI + 0.404 AQI + 0.892 SGI + 0.115 DEPI − 0.172 SGAI + 4.679 TATA − 0.327 LVGI, from the indices of receivables to sales, gross margin, asset quality, sales growth, depreciation, SG&A, total accruals (net income − cash from operations, over assets) and leverage. Beneish’s cut-off is −1.78.
Reading the results
- The DuPont split shows where a return on equity comes from: margins, the use of assets, or debt. Two companies with the same ROE can earn it very differently.
- The scores are each author’s model applied to your figures. Altman built his on manufacturers that went bankrupt and ones that did not; Piotroski on companies with high book-to-market ratios; Beneish on companies found to have manipulated their accounts and others. They classify figures as their authors did; they do not say what will happen to a company or what its shares are worth.
- A signal or score shows “—” when a figure it needs is missing.
What it leaves out
Anything not in the figures you type: the notes to the accounts, one-off items, the quality of the audit, the industry and the economy. Ratios of banks and insurers need models of their own. Restate both years the same way before comparing them.
Limitations
- You type the figures; nothing is looked up.
- The models were built on particular samples of companies; they are not designed for banks, insurers or start-ups.
- Year-end figures for DuPont; Piotroski’s own definitions for the F-score (assets at the start of each year).
- Scores describe figures, not companies: they are not ratings and not opinions on any share.
Privacy
Everything happens in your browser. What you enter or open here is not uploaded or stored by MySmartCoPilot.
Frequently asked questions
What do I get without a pass?
Without a pass, Financial Ratio Analyzer: Piotroski, Altman & DuPont shows the DuPont return on equity in full, with the first rows of each table and the first step of the working; every other figure is hidden. Until you unlock it, the result can’t be downloaded or copied. A Pro, Premium or Ultimate pass, a one-time payment that never renews, unlocks the full result. The pricing page lists the passes and their prices.
What does a Piotroski score of 9 mean?
That all nine of Piotroski’s signals were positive for the two years of figures you entered: profits and cash flow up, debt down, liquidity and margins better, no new shares. In his study of high book-to-market companies, scores of 8–9 formed the high group. It is a description of the accounts, not a rating of the company.
Which Altman score should I use?
Z for a listed manufacturer (it needs the market value of the equity), Z′ for a private company (book equity instead), and Z″ for non-manufacturers and companies in emerging markets (it leaves out sales over assets, which differs by industry). The tool shows all three when it has the figures.
What do Altman’s zones mean?
Altman drew them from his own samples: above the upper boundary his model classed companies with those that did not go bankrupt, below the lower one with those that did, and between them was a grey zone where it made more errors. They are his boundaries, shown as his.
What is the Beneish M-score for?
Beneish built it to tell apart companies that had manipulated their earnings from others, using eight indices that compare two years of accounts. Above his −1.78 cut-off his model classed the figures with those of manipulators. A high score is a reason to read the accounts more closely, not proof of anything.
Where do I find these figures?
In the annual report: the income statement (revenue, cost of sales, operating profit, interest, tax, net income), the balance sheet (assets, liabilities, equity, retained earnings, receivables, property and equipment) and the cash-flow statement (cash from operations, depreciation).
Is anything I type uploaded?
No. Everything is worked out in your browser, and nothing you enter is sent to our server.