What is F-Score?

F-Score evaluates companies based on 3 major categories, each containing several criteria. Each criterion that is met scores 1 point, if not met scores 0. A. Profitability (4 points) 1. Positive Net Income — This year's net income is greater than 0. Profitable companies are healthier than those losing money. 2. Positive ROA (Return on Assets) — Net income divided by total assets > 0. The company is generating returns from its assets. Read at What is ROA. 3. Positive Operating Cash Flow (CFO) — Cash flow from operations > 0. This shows the company is actually generating cash, not just paper profits. 4. CFO > Net Income — Operating cash flow exceeds net income. This signals high earnings quality — more cash is coming in than the reported profit. B. Leverage & Liquidity (3 points) 5. Long-term debt ratio decreased — Long-term debt / total assets is lower than last year. The company is reducing its debt burden. 6. Current Ratio increased — Current assets / current liabilities is higher than last year. Short-term debt-paying ability has improved. 7. No share dilution — Shares outstanding have not increased (no rights issue or new share issuance). Dilution reduces existing investors' ownership proportion. C. Operating Efficiency (2 points) 8. Gross Margin increased — This year's gross margin is higher than last year. The company is becoming more efficient in production or has better pricing power. 9. Asset Turnover increased — Revenue / total assets is higher than last year. The company is more productive in using its assets to generate revenue.

After evaluating all 9 criteria, the total score determines fundamental quality: • F-Score 8–9: Very Strong — Excellent fundamentals. The company is profitable, debt is controlled, and efficiency is improving. Strong candidate for long-term investment. • F-Score 5–7: Fairly Good — Some areas need attention, but overall the company is in decent shape. Check which criteria failed to understand the weaknesses. • F-Score 0–4: Weak — Many red flags. The company may be losing money, debt is rising, or efficiency is declining. Be cautious about investing in stocks with low scores.

F-Score helps you detect signs of improving or deteriorating fundamentals. This matters because: 1. Objective initial filter — Instead of guessing, F-Score provides assessment based on real financial data. No opinions, purely numbers. 2. Great when combined with valuation — Cheap stocks (low PBV) with high F-Score have been proven by research to deliver better returns. Discounted price + improving fundamentals = great opportunity. 3. Avoiding value traps — Many stocks "look cheap" but have poor fundamentals. F-Score helps filter genuinely worthy cheap stocks from traps. 4. Easy to understand — No complex formulas needed. Just check 9 Yes/No criteria and add them up.

Let's say you're interested in BBRI stock: Profitability: • Positive Net Income? ✅ (1) • Positive ROA? ✅ (1) • Positive CFO? ✅ (1) • CFO > Net Income? ✅ (1) Leverage & Liquidity: • Long-term debt ratio decreased? ✅ (1) • Current Ratio increased? ❌ (0) • No dilution? ✅ (1) Operating Efficiency: • Gross Margin increased? ✅ (1) • Asset Turnover increased? ✅ (1) Total F-Score: 8/9 — Very Strong Only 1 criterion failed (Current Ratio slightly decreased). Overall, BBRI shows very healthy fundamentals and is worth considering for investment.