Research Insight (COMPUSTAT) User's Guide

Research Insight (COMPUSTAT) User's Guide Rutgers University Libraries prepared by Ryan Womack Business Information Services Librarian rwomack@rci.rutgers.edu November 12, 1999 Ryan Womack, 11/99 p. 1

TABLE OF CONTENTS Introduction to Research Insight (COMPUSTAT) 3 The Research Insight interface 3 Options available from the Research Insight Toolbar, including Save, Lookup, Run 4 Predefined Company Sets in Research Insight 6 Error codes in Research Insight 7 Comparing your company's returns to market averages in Research Insight 8 Computing Industry Averages in Research Insight 9 Finding Individual Data Items in Research Insight (using Research & Development Expense as an example) 10 For further information 11 Ryan Womack, 11/99 p. 2

Introduction to Research Insight (COMPUSTAT) Research Insight software allows you to selectively access and analyze data on approximately 20,000 companies in the COMPUSTAT North America database. Coverage includes all companies trading on US and Canadian exchanges during the past 20 years, including sponsored ADRs of foreign corporations. The COMPUSTAT database includes an extensive number of financial time-series items, available on an annual basis for the past 20 years and on a quarterly basis for the past 48 quarters. Monthly series are available for 240 months, and daily data on selected items is available for the most recent four months. The Research Insight interface The Welcome Screen appears when Research Insight is first launched. This screen displays the basic options available to you. You can always return to the Welcome Screen by clicking the "Shaking Hands" icon at the top of the page. The Welcome Screen displays 10 options, represented by icons. These options are also available to you from within Research Insight on the left-side toolbar. They are: Research Assistant - guides you through selection of a data set, including custom screening, then through the creation of custom reports or charts. This is the most powerful and flexible way to start using Research Insight. Report Assistant - select elements for a custom report, then screen for data. Chart Assistant - select elements for a custom chart, then screen for data. Company Highlights - generates a predefined report of summary data for the company you choose. Library - look up line-of-business descriptions for the company you choose. Open Screen - choose from a selection of predefined screening criteria and run your screen against the set of companies you choose. Open Report - select from a wide variety of predefined reports for your company, including balance sheets, ratio reports, and stock performance. This is usually the easiest way to get to commonly needed data. Open Chart - select from predefined charts, and display output for the company you choose. Open Set - If you have created a saved set of companies, you can retrieve it here. Prices, News and Headlines - This feature in not available in the academic version of Research Insight. Tips: Creating a chart always creates an underlying report for the chart, so you can see the data both visually and numerically. Creating a report creates only numeric data. Research Insight's Assistants (Research, Report, and Chart) walk you through the process of selecting your own customized output. Open Screen, Open Report, and Open Chart allow you to access predefined output whose format cannot be easily changed. Ryan Womack, 11/99 p. 3

Options available from the Research Insight Toolbar, including Save, Lookup, Run To Save a Report: Lookup Note: Saved charts and formulas can only be read by Research Insight, not other software. Reports (numerical data) can be read by most software packages, including Microsoft Excel. On library workstations, you can only save to the A: drive; you will not be able to read from the A: drive. After running your report, when your data is displayed on screen, click the Save (Diskette) icon. In the dialog box that appears, give the file a name. By default, Research Insight saves your data as a tab-delimited text file. If you'd like other options (comma-delimited, fixed width, etc.), press the Text Options button to select. Select the A: drive as the destination for the save. If you have a set of many companies, you can save data for all companies at once by selecting All Companies at the bottom of the dialog box. Click Save. Your data file can now be opened in Excel or other software programs. Use Lookup (Open Book icon), for any questions about companies, data, or functions. Clicking Lookup will open a dialog box with four tabs: Companies: Use this to find ticker symbols and company names in the database. Also the Segments button lists Compustat's available business segments data. Items: Allows you to search for data items and view their definitions. Further documentation on individual data items can be found in the Research Insight Data Guide. Functions: Search, select, and view definitions of all functions defined in Compustat. Especially useful for creating custom reports and screens. Sets: Select company sets from this screen. In any of these tab windows, use the Find Text line to search all free text for the words you type. This is often the quickest way to locate a data item. Once a data item is selected, use the Paste button to insert it into the currently open text box in Research Insight. For example, if you clicked on Lookup while in the company selection text box, Paste will place a company name selected from the Lookup window into the company selection text box. You can repeat the Paste operation as many times as you'd like. When finished, click Close to close the dialog box. Ryan Womack, 11/99 p. 4

Run The Run icon, symbolized by the running man, allows you to rerun a report for a new company or group of companies. Simply click the Run icon to access the company screening dialog box. You can now enter new companies or screens. Click OK to close the dialog box, and your report will be updated with information on the new companies you have chosen. Run will not allow you to modify your report. Welcome The Welcome icon, symbolized by a handshake, brings up the Welcome screen. From this screen, any kind of Research Insight report, chart, or screen can be run. Use the Welcome icon if you would like to start your research over again from the beginning. Note: The Help (Question Mark) icons on the top toolbar are not as useful as the help available from the text menus at the top. Ryan Womack, 11/99 p. 5

Predefined Company Sets in Research Insight Note: Research Insight always prefixes a company set with $. Research Insight uses the COMPUSTAT (North America) database of companies. Public companies trading on the New York Stock Exchange, American Stock Exchange, NASDAQ, OTC, Toronto Stock Exchange, Quebec Stock Exchange, Montreal Stock Exchange, and wholly-owned subsidiaries of companies required to file with the SEC are included. Available predefined sets are as follows: $C Active - all companies in the database that are actively traded in the US. This excludes Canadian companies not trading on American exchanges, but includes ADRs. Note: This is the default set for company screening. $R Research - all inactive companies in the database $T Canadian - companies trading on Canadian exchanges, reported in Canadian dollars $I Indexes - defined by sector over Active + Research companies. This set includes market indices for industry groupings and other stock indices like the Dow Jones Industrials, S&P 500, Russell 2000, etc. $CS $CG $CI $RI $TI $II $ADR $SP_100 $SP_500 $SP_IND $SP_MID $SP_SMALL $SP_SUPER Business Segments - companies for whom data is available by line-of-business Geographic Segments - companies for whom data is available by area of operation Active Issue - active companies with stock price data Research Issue - research companies with stock price data Canadian Issue - Canadian companies with stock price data Index Issue - Indexes defined by sector over Active + Research companies with stock price data Companies that trade ADRs and ADSs (foreign companies) S&P 100 Index component companies S&P 500 Index component companies S&P Industrials Index component companies S&P MidCap 400 Index component companies S&P SmallCap 600 Index component companies S&P 1500 Super Composite Index (S&P 500 + S&P MidCap + S&P SmallCap) Sets can be added and subtracted. For example, for currently active US and Canadian companies, less ADR companies, define your set as $C+$T-$ADR. Not all sets are compatible for adding and subtracting. For example $I+$C is not valid since companies and indexes do not report the same kind of data. Ryan Womack, 11/99 p. 6

Error codes in Research Insight Research Insight contains a vast array of data items that companies can report, although not every company presents data for every item. Sometimes a company will combine two or more items into one item, or will not disclose information on certain items. When this happens, you will see a data code instead of data. For example, if a company has interest income, but includes it in interest expense, the Interest Income item will contain a combined figure code (@CF). Research Insight uses the following data codes: Code @AF @CF @IF @NA @NC @NM @SF Description Annual Figure (only annual data is available for quarterly items). Applies only to the COMPUSTAT (North America) database. Combined Figure (the figure is combined in another item) Insignificant Figure (the number is immaterial) Not Available (company does not disclose information about the item) Not Calculable (rules for calculation were not met) Not Meaningful (item is not meaningful for a company) Semi-annual Figure (only semi-annual data is available for quarterly items). Ryan Womack, 11/99 p. 7

Comparing your company's returns to market averages in Research Insight The easiest way to compare your company's returns to market averages is to use predefined charts. To do this, click the Open Chart icon. In the Pricing folder, you can compare changes in stock price. In the Peer folder, there are numerous charts to compare your company's return to industry peer groups. In the Market folder, you can compare your company to market averages such as the S&P 500. As an example, open the Market folder and choose "5 year total return to shareholders". Click Finish. The company screening window will open. Type the ticker symbol of your company or companies. As an option, you can also look at returns of companies in the same industry sector, economic sector, or SIC code by selecting these options under "Find Similar Companies". After making your selection, click OK. Research Insight will generate a chart comparing your company's returns to the S&P 500 and to the Industry Index (as defined by COMPUSTAT) for the last 5 years. In the "Show" box, click Report to view the data underlying the graph. This data can be saved to a file for later use. For a chart of S&P 500 returns vs. T-Bill returns that can be customized by date, use the predefined chart, "Economic Returns - 10 years". To change the dates for a report, click the Run icon and select the "Report Time Periods" tab from the company screening dialog box. Here you can select a new time period for which to run the report. Note: Returns for indexes other than the S&P 500 can be found by searching the $I (Indexes) set from the company screening window. Here you will find sectoral indexes, Dow Jones averages, NASDAQ, Russell 2000, and other indexes. Use the Lookup feature to identify and paste the appropriate codes to the company screening window. Ryan Womack, 11/99 p. 8

Computing Industry Averages in Research Insight Reports that compute industry average balance sheets, income statements, and ratios can be found in the Sector and Industry Reports folder. Use the Open Report button to access these reports. For quick results, the Financial Summary (Including Industry Comparisons) report will give one company's financials compared to its S&P industry sector for five years. To compute other industry averages, follow the following procedure: Click the Open Report icon on your left-side toolbar. Scroll down and open the Sector and Industry Reports Folder. Here you will find many comparison reports (including Average Annual Balance Sheets, Average Annual Income Statements, Average Annual Ratios) that you can run against a user-defined set of companies. Select a report, then click Finish. A dialog box to select the time period you would like to run will open. The default time period if you make no changes is the current/latest period. Click OK to accept the time period. You will be asked for the name of your set. One method of creating a set is to use the @SET function. The syntax for this expression is as follows: @SET(base set, logical expression) For example, to select currently active companies within the beverage industry use the following expression: @SET($C,SIC=5812) $C is the base set of companies to be screened according to the logical expression. Any of the default sets described earlier, such as $ADR or $SP_500, can be used as a base set. The logical expression selects those companies with a Standard Industrial Classification Code of 5812, the appropriate code for the beverage industry. Any COMPUSTAT data item can be used in this manner in the @SET expression. Consult the Data Definitions under Help on the menu bar for a complete listing of data items. As an alternative to the @SET function, one can type in a list of ticker symbols to define a custom company set. The syntax for this is: {"TIC","KER","SYM","BOL"} You must use curly brackets when typing this expression. Once you have selected your set, Research Insight will compute averages over your set. Note: The Average Annual Ratios report can generate some nonsensical results. Research Insight computes a simple average over all companies in the selected set. The larger the set, the more likely that bad data items from a single company will throw off the computed averages. Be sure to compare the ratios computed by Research Insight to other ratio sources, such as Dun & Bradstreet's Industry Norms and Key Business Ratios, before trusting the results. Average ratios over small sets, such as the top 5 companies in an industry, are more reliable. Ryan Womack, 11/99 p. 9

Finding Individual Data Items in Research Insight (using Research & Development Expense as an example) Data that are not available through predefined reports and charts can be manually extracted using the following technique. One commonly requested item that must be accessed in this manner is Research & Development Expense. Research & Development Expense is available for approximately 35% of the companies listed in Compustat. 1. To extract your data items, run the Report Assistant. Select the format you would like your output to appear in and click Next. 2. A data selection window will appear. On the right hand side, under "New Item", click the Lookup button. A new window will appear that allows you to search for individual data items. As an example, type R & D. You will see a list of data items relating to R & D. Choose the kind of R & D expense that you need data for. Some options are annual vs. quarterly, company-sponsored vs. customer-sponsored, or broken down by business segment. By clicking the Definition button, you can view the data definitions to clarify which data item you need. Now, Paste your selection back into the data selection window. Click on the Green Down Arrow to add the data item to the items that will be retrieved in your report. You can repeat step 2 to add as many data items as you would like. When done, click Finish. 3. The company screening window will appear. Enter ticker symbols for companies you are interested in, or use the screening functions on the right-hand side. Click OK when done. A custom report containing your data elements will be generated for the companies you selected. Ryan Womack, 11/99 p. 10

For further information This guide provides only a brief overview of the structure and commonly used features of the Research Insight database. For further information, check the series of guides listed below, available in libraries with Research Insight, or consult with a reference librarian at one of the business libraries of Rutgers University. Standard & Poor's Research Insight: Getting Started Standard & Poor's Research Insight: Beyond Basics Standard & Poor's Research Insight: Report and Chart Library Compustat (North America) Data Guide Ryan Womack, 11/99 p. 11