We are talking about the Piotroski Score (Piotroski F-Score). 👇
1️⃣ What is F-Score simply?
It is a scoring system from 0 to 9.
0-2: Financial disaster (run away!). ❌
8-9: A very strong company that prints money (gem). ✅
The measure does not look at the price, but at the "health of the financial statements."
2️⃣ How are the 9 points calculated?
The rule is simple, each condition met = 1 point:
🟢 Profitability (Is the project growing?):
Is net profit positive?
Is operating cash flow positive? (Cash is King 👑)
Is return on assets improving compared to last year?
Is the quality of profits real (cash flow > net income)?
🟢 Debt and liquidity (Is the project in danger?):
5. Has debt decreased?
6. Has current liquidity improved?
7. Have they stopped share dilution? Very important for crypto investors!
🟢 Efficiency:
8. Has the profit margin improved?
9. Has asset efficiency increased?
3️⃣ How do we apply the "F-Score mindset" in crypto?
While the metric was designed for stocks, the principle is what separates the winning investor from the losing one in crypto. When reviewing any project (Token), ask yourself these questions inspired by Piotroski:
Dilution point: Are there massive "Token Unlocks" coming that could flood the market? (Similar to issuing new shares).
Revenue point: Is the protocol generating real yield (Real Yield) or solely dependent on minting new tokens?
Liquidty (TVL): Is the locked value (TVL) growing or fleeing from the project?
Check
Markets don't forgive randomness. Whether you're trading stocks or cryptocurrencies, always look for quality.
The price tempts you to enter.
But financial fundamentals are what keep you safe.
Don't be an easy target for projects with an F-Score of zero!
💬 In your opinion, what is the most important criterion for evaluating a project's strength right now? Share your thoughts in the comments! 👇
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