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End GameMeasures of profitability and costs, by industry
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VariableExplanationWhy?
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Number of firmsNumber of firms in the industry grouping.Law of large numbers?
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Gross MarginAggregated gross profits as a percent of aggregated revenues, across companies in the group.Profitability after subtracting out the direct cost of production, but before fixed costs, financial expenses and taxes.
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Net MarginAggregated net profits as a percent of aggregated revenues, across companies in the group.Profitability, after all expenses and taxes, accrusing to stocholders in the firm
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Pre-tax, Pre-stock compensation Operating MarginAggregated operating profits, prior to taxes and stock compensation, as a percent of aggregated revenues, across companies in the group.Operating profitablity, prior to taxes and expenses associated with stock based compensation
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Pre-tax Unadjusted Operating MarginAggregated as-stated operating profits, prior to taxes, as a percent of aggregated revenues, across companies in the group.Operating profitability, as measured in financial statements.
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After-tax Unadjusted Operating MarginAggregated as-stated operating profits, after netting effective taxes, as a percent of aggregated revenues, across companies in the group.Operating profitability, after assuming taxes paid at effective tax rate, as measured in financial statements.
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Pre-tax Lease adjusted MarginAggregated operating profits, adjusted for leases treated as debt, as a percent of aggregated revenues, across companies in the group.Operating profitability, with leases treated as debt, prior to taxes.
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After-tax Lease Adjusted MarginAggregated operating profits, adjusted for leases treated as debt and taxes, as a percent of aggregated revenues, across companies in the group.Operating profitability, with leases treated as debt, after paying taxes (at effective tax rate)
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Pre-tax Lease & R&D adj MarginAggregated operating profits, adjusted for leases treated as debt and R&D as a capital expense, as a percent of aggregated revenues, across companies in the group.Operating profitability, with leases treated as debt and capitalized R&D, prior to taxes.
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After-tax Lease & R&D adj MarginAggregated operating profits, adjusted for leases treated as debt and R&D as a capital expense, after effective taxes, as a percent of aggregated revenues, across companies in the group.Operating profitability, with leases treated as debt and capitalized R&D, after paying taxes (at effective tax rate)
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EBITDA/SalesAggregated EBITDA as a percent of aggregated revenues, across companies in the group.Measure of pre-tax cash profitability of operations
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EBITDASG&A/SalesAggregated EBITDA, with SG&A added back, as a percent of aggregated revenues, across companies in the group.Measure of pre-tax cash profitability, prior to SG&A expenses, of operations
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COGS/SalesAggregated cost of goods sold (COGS) as a percent of aggregated revenues, across companies in the group.Measure of direct costs of production, as percetn of sales, of products/services sold.
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R&D/SalesAggregated R&D costs as a percent of aggregated revenues, across companies in the group.Measure of investment in long term growth by companies that derive their value from the products of R&D (including patents and licenses).
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SG&A/ SalesAggregated SG&A costs as a percent of aggregated revenues, across companies in the group.Measure of SG&A costs as percent of sales.
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Stock-Based Compensation/SalesAggregated stock-based compensation expensed, as a percent of aggregated revenues, across companies in the group.Measure of expenses from stock-based compensation.
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Lease Expense/SalesAggregated current year's lease expense, as a percent of aggregated revenues, across companies in the group.Measure of current year's lease expense, as percent of sales.
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Lease adjustment to operating incomeOperating Income + Current year's lease exp - Lease Asset DepreciationLease expenses are financing, not operating expenses. Hence we add them back. Treating leases as debt creates a lease asset, that needs to be depreciated. Hence the subtracting out of lease depreciation.
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R&D adjustment to operating incomeOperating Income + Current year's R&D exp - Amortization of R&D assetR&D is a capital, not an operating expense. Hence we add it back. Treating R&D as a capital asset creates amortization over multiple perods. Hence we net out this amortization.
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