16.12 Net Contribution
Net contribution = gross margin x sales - cost of marketing
\[ NC = m \times S(a) -ka \]
| 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