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This paper is an attempt to validate the use of Piotroski F-Score analysis for identifying value stocks. Piotroski F-Score analysis devised a scale according to specific criteria found in the financial statements which encompasses aspects like Profitability, Leverage, Liquidity, Operating Efficiency to give a holistic view of the performance and position of the company. This method proved successful in interpreting the strengths and weaknesses a company possesses and the opportunities available for the company to develop upon and the threats it faces in doing so. One aspect that is missing in this method of analysis is the time horizon applicable to the relevance of its results. Hence, this method could be made more effective if we add the time horizon applicable for the results to remain relevant. Therefore, the parameters are grouped in such a way that all the factors that are more sensitive to short term changes are made into one while the factors that are driven in long term are made into another. The sensitivities of parameters are different on the short and long term performance of the company and hence weights are assigned to each parameter in line with the effect it has on the company's performance. This exercise ensures that the factors that are more critical are given more weightage than the less critical ones. This research was applied to all the companies of Banking and Automobile sector that were a part of the Nifty Index for validating this model.
INTRODUCTION
The global market place has become more complex and volatile lately, making the process of framing an outlook more difficult and cumbersome. The frequent occurrence of extreme events has put the state of businesses in jeopardy making the future very bleak and uncertain. This calls for a method which is very rigid and holistic, covers all the critical aspects of the business. It also necessitates the division of time frame into short term and long term to evaluate the outlook of the company in both the time frames to understand its relative standing. After the study of various available analytical methods it seemed relevant to use a metric which is based on Piotroski F-Score as it encompasses a holistic approach. Though the F-Score covered many critical aspects, there...