Health Engine Reference

The health engine combines earnings quality, leverage, liquidity, and bankruptcy risk into a single review.

Piotroski F-score

The Piotroski F-score is a nine-point score that measures financial strength.

Signal	What it measures	Formula	Pass condition
ROA positive	Profitability	Net income / Total assets	> 0
CFO positive	Cash generation	Operating cash flow > 0	true
ROA increasing	Improving profitability	Current ROA > Prior ROA	true
Accruals	Quality of earnings	Net income - CFO < 0	true
Leverage decreasing	Lower financial risk	Current D/E < Prior D/E	true
Liquidity increasing	Short-term coverage	Current current ratio > Prior current ratio	true
No dilution	Shareholder preservation	Shares outstanding not increased	true
Gross margin increasing	Margin improvement	Current gross margin > Prior gross margin	true
Asset turnover increasing	Efficiency gain	Current asset turnover > Prior asset turnover	true

The Altman Z-score uses five weighted factors to estimate bankruptcy risk.

Factor	Formula	Weight	What it measures
X1	(Current assets - Current liabilities) / Total assets	1.2	Working capital efficiency
X2	Retained earnings / Total assets	1.4	Cumulative profitability
X3	EBIT / Total assets	3.3	Operating earnings
X4	Market value of equity / Total liabilities	0.6	Market leverage
X5	Revenue / Total assets	1.0	Asset turnover

Debt/equity is a core indicator of capital structure risk and should be interpreted with sector context.

The current ratio shows whether current assets are sufficient to cover current liabilities.

Interest coverage measures the ability to pay interest from operating profits.

{
  "ticker": "TCS",
  "piotroski_f": 8,
  "altman_z": 4.5,
  "debt_to_equity": 0.14,
  "current_ratio": 2.2,
  "interest_coverage": 45.0
}

{
  "ticker": "EXAMPLE",
  "piotroski_f": 2,
  "altman_z": 1.3,
  "debt_to_equity": 3.8,
  "current_ratio": 0.8,
  "interest_coverage": 1.1
}