16.12 Net Contribution

Net contribution = gross margin x sales - cost of marketing

$$NC = m \times S(a) -ka$$

All data without CSRP come from Compustat/Fundamentals

Variable	Data Item	Source
Book Value on Equity	PRCC_C x CSHO	PRCC_C: CRSP/Annual Update/CRSP/Compustat Merged/Fundamental Annual/Supplemental Data Items CSHO: CRSP/Annual Update/CRSP/Compustat Merged/Fundamental Annual /Miscellaneous Items
CAPEX	CAPX	Cash Flow Items
Capital Intensity	CAPX / AT	CAPX: Cash Flow Items AT: Balance Sheet Items
Cash	CH	Balance Sheet Items
Cash and short-term Investments	CHE	Balance Sheet Items
Cash Flow	$\frac{IBC + DP}{AT}$	IBC: Cash Flow Items DP: Income Statement Items AT: Balance Sheet Items
Cash Holdings	$\frac{CHE}{AT}$	CHE: Balance Sheet Items AT: Balance Sheet Items
Closing Price (annual, calendar)	PRCC_C	Supplement Data Items
Closing Price (annual, fiscal)	PRCC_F	Supplement Data Items
Cost of Capital	$\frac{XINT}{DLC}$	XINT: Income Statement Items DLC: Balance Sheet Items
Current Assets Total	ACT	Balance Sheet Items
Current Liabilities	LCT	Balance Sheet Items
Debt in Current Liabilities	DLC	Balance Sheet Items
Dividends (common)	DVC	Income Statement Items
Dividends (preferred)	DVP	Income Statement Items
Dividends (total)	DVT	Income Statement Items
Earning per Shares	$\frac{NI}{CSHO}$	NI: Income Statement Items CSHO: Miscellaneous Items
EBIT	EBIT	Income Statement Items
EBITDA	EBITDA	Income Statement Items
Equity Book Value	BKVLPS	Balance Sheet Items
Firm Size	log(AT)	AT: Balance Sheet Items
Income before Extraordinary Items	IB	Income Statement Items
Interest on long-term debt	UXINTD	Income Statement Items
Interest on short-term Debt	UXINST	Income Statement Items
Leverage	$\frac{DLTT + DLC}{SEQ}$	Balance Sheet Items
Long-term Assets	AT - ATC	Balance Sheet Items
Long-term Debts	DLTT	Balance Sheet Items
Market to Book Ratio	$\frac{MKVALT}{BKVLPS}$	MKVALT: Supplement Data Items BKVLPS: Balance Sheet Items
Market Value	MKVALT or CSHO x PRCC_F	MKVALT: Supplement Data Items CSHO: Miscellaneous Items PRCC_F: Supplement Data Items
Net income (Loss)	NI	Income Statement Items
Payout Ratio	$\frac{DVP + DVC + PRSTKC}{IB}$	DVP: Income Statement Items DVC: Income Statement Items PRSTKC: Cash Flow Items IB: Income Statement Items
Property, Plant, and Equipment	PPENT	Balance Sheet Items
Purchase of common and preferred Stocks	PRSTKC	Cash Flow Items
R&D Intensity	$\frac{XRD}{AT}$	XRD: Income Statement Items AT: Balance Sheet Items
ROA	$\frac{NI}{AT}$	NI: Income Statement Items AT: Balance Sheet Items
ROE	NI/(CSHO x PRCC_F)	NI: Income Statement Items CSHO: Miscellaneous Items PRCC_F: Supplement Data Items
ROI	$\frac{NI}{ICAPT}$	NI: Income Statement Items ICAPT: Balance Sheet Items
Sale	SALE	Income Statement Items
Short-term Liabilities	APC	Balance Sheet Items
Stockholders Equity (total)	SEQ	Balance Sheet Items
Tangibility	$\frac{PPENT}{AT}$	PPENT: Balance Sheet Items AT: Balance Sheet Items
Tobin’s Q	$$AT + (CSHO x PRCC_F) - CEQ$$ /(AT)	AT: Balance Sheet Items CSHO: Miscellaneous Items PRCC_F Supplement Data Items CEQ: Balance Sheet Items
Total Assets	AT	Balance Sheet Items
Total Equity	PSTKC + CSHO	PSTKC: Balance Sheet Items CSHO: Miscellaneous Items
Total Liabilities	LT	Balance Sheet Items

Information is taken from WRDS Data Items

Variable	Data Item	Data Source
Age		CRSP
Valuation
Market Cap/ GDP		series GDPA (U.S. Bureau of Economic Analysis)
Tobin’s q	(AT (CSHO * PRCC_F) - CEQ)/(AT)
Market cap (000s)	$prc \times shrout$	CRSP
Small firm	Market cap < $ 100M
Revenue Herfindahl (for each 3-digit NAICS in each year)	$\frac{revt^2_i}{\sum_1^n revt}$ where $i$ = the firm, $n$ = firms in the same industry
Investment
Capital Expenditures / Assets	$\frac{capx}{lag(at)}$
R&D/Assets	$\frac{xrd}{lag(at)}$	If R&D is missing, set to 0
Fixed Assets/ Assets	$\frac{ppent}{at}$
Inventory / Assets	$\frac{invt}{at}$
Cash / Assets	$\frac{che}{at}$
Profitability
Operating cashflow / assets	$\frac{oidbp - xint - txt}{lag(at)}$	Operating income before depreciation (oibdp) minus interest (xint) minus taxes (txt), divided by lagged assets
Loss firms	% of firm with net income (ni) < 0
R&D-adjusted operating cash flow/ assets	$CF/at + RD/ at$
ROA	$\frac{ib}{at}$
Financing
Book Leverage	$\frac{dltt + dlc}{at}$
Market leverage	(dltt + dlc)/(at - ceq + (chso x prcc_f)
Net Leverage	$\frac{dltt + dlc - che}{aat}$
Negative net leverage firms	% of firms with Net Leverage < 0
Interest/ Assets	$\frac{xint}{lag(at)}$
No debt firms	% with no dltt or dlc
Net equity issuance	$\frac{sstk - prstkc}{lag(at)}$
Ownership
Institutional ownership	% of shares outstanding held by institution	Thomson Financial 13f data
Blockholder	% of firms with an institutional owner who holds 10 percent or more of outstanding shares	Thomson Financial 13f data
Payout Policy
Dividend paying firms	% of firms with dvc > 0
Dividends / Assets	$\frac{dvc}{lag(at)}$
Repurchase / Assets	$\frac{prstkc - pstk}{lag(at)}$
Total payout/ assets	$\frac{dvc + prstkc}{lag(at)}$
Total payout/ Net income	$\frac{dvc+ prstkc}{ni}$

Info from (Kahle and Stulz 2017) Appendix

References

Kahle, Kathleen M., and René M. Stulz. 2017. “Is the US Public Corporation in Trouble?” Journal of Economic Perspectives 31 (3): 67–88. https://doi.org/10.1257/jep.31.3.67.