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]"

financial-health-scores