octagonai Financial Health Scores
Retrieve financial health scores including Altman Z-Score and Piotroski Score for public companies using Octagon MCP.
Prerequisites
Ensure Octagon MCP is configured in your AI agent (Cursor, Claude Desktop, Windsurf, etc.). See references/mcp-setup.md for installation instructions.
Query Format
Retrieve financial health scores for <TICKER>, including the Altman Z-Score and Piotroski Score.
MCP Call:
{
"server": "octagon-mcp",
"toolName": "octagon-agent",
"arguments": {
"prompt": "Retrieve financial health scores for TSLA, including the Altman Z-Score and Piotroski Score"
}
}
Output Format
The agent returns health scores with supporting metrics:
Altman Z-Score: 16.84 (calculated using working capital, total assets, retained earnings, EBIT, and market cap). A score above 3.0 indicates low bankruptcy risk.
Piotroski Score: 6 (out of a maximum 9). This score assesses profitability, leverage, liquidity, and operating efficiency.
Supporting Financial Metrics:
| Metric | Value (USD) |
|---|---|
| Working Capital | 36,928,000,000 |
| Total Assets | 137,806,000,000 |
| Retained Earnings | 39,003,000,000 |
| EBIT | 5,616,000,000 |
| Market Cap | 1,400,635,834,800 |
| Total Liabilities | 54,941,000,000 |
| Revenue | 94,827,000,000 |
Data Source: octagon-financials-agent
Altman Z-Score Interpretation
The Altman Z-Score predicts bankruptcy probability:
| Z-Score Range | Interpretation |
|---|---|
| > 3.0 | Safe Zone - Low bankruptcy risk |
| 1.8 - 3.0 | Grey Zone - Moderate risk, needs monitoring |
| < 1.8 | Distress Zone - High bankruptcy risk |
Z-Score Formula
Z = 1.2(WC/TA) + 1.4(RE/TA) + 3.3(EBIT/TA) + 0.6(MC/TL) + 1.0(Rev/TA)
Where:
- WC = Working Capital
- TA = Total Assets
- RE = Retained Earnings
- EBIT = Earnings Before Interest and Taxes
- MC = Market Cap
- TL = Total Liabilities
- Rev = Revenue
Piotroski Score Interpretation
The Piotroski F-Score (0-9) assesses financial strength:
| Score Range | Interpretation |
|---|---|
| 8-9 | Strong - High quality value stock |
| 5-7 | Moderate - Average financial health |
| 0-4 | Weak - Poor financial health |
Piotroski Components (9 criteria)
Profitability (4 points):
- Positive Net Income
- Positive Operating Cash Flow
- Return on Assets improvement
- OCF > Net Income (accruals quality)
Leverage/Liquidity (3 points): 5. Lower long-term debt ratio 6. Higher current ratio 7. No new share issuance
Operating Efficiency (2 points): 8. Higher gross margin 9. Higher asset turnover
Analysis Tips
Combined Assessment
Use both scores together:
- High Z-Score + High Piotroski = Financially healthy
- High Z-Score + Low Piotroski = Watch operating trends
- Low Z-Score + High Piotroski = Leverage concern
- Low Z-Score + Low Piotroski = Avoid or deep value
Value Investing Application
Piotroski Score designed for:
- Screening high book-to-market stocks
- Identifying quality within value
- Avoiding value traps
Credit Analysis
Z-Score useful for:
- Bond investment decisions
- Supplier credit assessment
- Counterparty risk evaluation
Sector Considerations
Scores work best for:
- Manufacturing companies (Z-Score original use)
- Mature businesses with stable operations
- Less reliable for: financials, early-stage, asset-light
Follow-up Queries
Based on results, suggest deeper analysis:
- "What factors contributed to [COMPANY]'s Piotroski Score versus industry peers?"
- "How does [COMPANY]'s Altman Z-Score compare to its historical averages?"
- "Break down the individual components of [COMPANY]'s Piotroski Score"
- "Compare [COMPANY]'s financial health scores to [PEER1] and [PEER2]"