R&D 000$
R&D spending in thousands of dollars for five years adjusted for inflation
using U.S. Department of Labor Consumer Price Index. According to FASB #2, R&D
is company sponsored research for the discovery of new knowledge to be used in a new
product, service or process for improving an existing product. Development is using
research to plan and design a new product or process.
SIC SHARE
This company's share of inflation adjusted R&D spending and net sales among all firms
in the same industry as defined by its 4-digit SIC (Standard Industrial
Classification.) Share of R&D spending is a measure of competitiveness and a
determinant of market share; share of sales measures the company's relative strength
within its industry.
SALES
Net sales in thousands of dollars adjusted for inflation by the CPI. Net sales is defined
in each company's annual report and is sales after discounts and allowances.
AVG CHG
Mean average annual percentage change of inflation adjusted R&D spending, share of
spending, sales and share of sales over five years. An important measure of real
growth.
RELATIVE R&D EFFECTIVENESS
The R&D-to-sales ratio of all companies combined in the same SIC divided by
this company's R&D-to-sales ratio. If a company is spending less to get a
greater share of sales, the effectiveness ratio is greater than one. If it is spending
more to get a smaller share of sales, its ratio is less than one.
WHAT IF SCENARIOS
Shows what sales and share of sales would be if the company (1) cuts its R&D budget,
(2) makes no budget change, or (3) increases its budget assuming no change in spending
trends or effectiveness of competitors in the same industry.
MANAGEMENT BY OBJECTIVE
Shows what a company's R&D budget should be to produce a 5%, 10%, and 15%
increase in sales given trends within the SIC and the company's R&D effectiveness.
ROR% shows the expected rate of return on R&D spending if the company achieves a 5%,
10%, and 15% increase in sales and invests in the R&D required to achieve these sales
objectives. These are theoretical values based on present profit margins, industry trends,
and cost structures. However, companies with high RORs may find increased R&D spending
to be a sound investment.
RELATIVE R&D PROFIT
This company's gross margin (sales minus cost of goods minus R&D spending)
divided by the gross margin for the industry, then multiplied by total industry R&D
spending divided by this company's R&D spending. A ratio greater than one indicates
that a company is spending less on R&D relative to its profitability than the industry
as a whole. A ratio less than one indicates above average spending. A negative ratio
indicates an unprofitable firm. |
