Friday, March 22, 2019
Our New Master Class Video

Thursday, March 21, 2019
Tech Data’s Goodwill Adjustment

Tuesday, March 19, 2019
There’s Taxes, and There’s Taxes

Saturday, March 16, 2019
Adventures in Tax Cuts and Net Income

Monday, March 11, 2019
Big Moves in Goodwill, Intangible Value

Friday, March 8, 2019
CVS, Goodwill, and Enterprise Value

Thursday, February 28, 2019
Summary of Our Goodwill Research/ How-To

Wednesday, February 27, 2019
What Does ‘Other’ Mean? An Example

Thursday, February 21, 2019
Another Tale, Buried in the Footnotes

Wednesday, February 13, 2019
Low Latency Calcbench

Monday, February 11, 2019
Now Streaming on Hulu: Red Ink

Thursday, February 7, 2019
Early Look at 2018 Tax Decline

Wednesday, February 6, 2019
You Revised WHAT, Netflix?

Thursday, January 31, 2019
Talking About Huawei Exposure

Wednesday, January 30, 2019
Another Discrepancy in Reported Numbers

Wednesday, January 30, 2019
Finding Revised Facts: Hertz Edition

Wednesday, January 23, 2019
GE Commercial Aviation Services: Bringing Numbers to Light

Monday, January 21, 2019
Differences in Earnings Releases and 10-Ks

Wednesday, January 16, 2019
The Importance of Textual Analysis

Tuesday, January 8, 2019
A Look at Climate Change Disclosures

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R&D Spending on the Rise, 2013-2016
Monday, March 13, 2017

Good news for science and math majors: Corporate America is spending more to keep you busy.

Calcbench looked at reported research & development spending among the S&P 500 the other day for the years 2013 through 2016. By just about every definition, the numbers look good. R&D spending is up among the group in absolute dollars, and as a percentage of revenue. Average spending per filer is also up, both in dollar terms and as a percentage of revenue. And more companies are disclosing R&D spending within our sample of 428 companies that had filed their 2016 reports as of March 13.

In other words: yay science!

First let’s look at the bigger picture. Below is a chart of R&D spending for the whole population fo 428 filers for the last four years.

Next, let’s remember that only 170 companies in our sample reported any R&D expenditures at all in 2016; the rest didn’t. And while the number of filers reporting R&D costs has risen in the last few years, that rise actually is quite small: up from 167 filers in 2013.

In other words, all those companies reporting no R&D spending pull down the average numbers quite a lot. So let’s cut those science no-shows loose, and look at the sub-group of purists keeping it real since 11th grade chemistry class. Their numbers below. The total R&D numbers are the same (because we only stripped out the zero-dollar filers), but the averages are now much higher.

Lastly, we decided to rank 2016 filers by R&D spending as a percentage of revenue, and then R&D spending in absolute dollars—with (perhaps to little surprise) wildly different results. Here are the top 10 spenders as a percent of revenue:

Almost all are pharmacuetical companies. That’s expected; most pharmaceutical companies spend boatloads on research before they even get a drug to market and see their first dime of revenue. Once a drug does reach market, the odds of it becoming a blockbuster are still slim.

Now let’s look at the top 10 in terms of absolute dollars:

This time only three pharmaceutical companies crack the top 10 (Merck, Pfizer, and Johnson & Johnson), and naturally Google leads the whole bunch—Google being Google and all.

As more filers submit their 2016 reports in coming weeks and months, we’ll do a more in-depth analysis of R&D. For now, however, if investing in research dollars is an omen of future growth and a brighter society, the omens are pointing in the right direction.

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