Business Reference Training Manual
September 4, 2007
Ryan Womack, Business and Economics Librarian
This manual provides a brief outline of the major types of business questions that may be encountered (based on experience at the Kilmer Reference Desk), along with an overview of the Rutgers University Libraries resources that can be used to answer these questions. It is not intended to provide detailed instructions about the use of individual sources or a comprehensive presentation of business concepts. Those interested in learning more should consult the Very Selective References listed below.
The manual is divided into four sections, discussing company research, industry research, marketing and demographic information, and a review of business databases.
The company is the basic unit of analysis for much business research. Student projects often require the analysis of a particular company's performance and strategy. This usually involves retrieving financial data on the company, and comparing the company's performance to other similar companies in the same industry. In addition, articles describing the company's actions will help to explain the numbers and predict future activity.
The amount of information available on a company depends primarily on the answers to three questions. One should be relatively sure of the answer to these questions before proceeding too far with a patron, because time may be wasted in inappropriate sources otherwise.
· Is the company public or private?
·
Is the company based in the
· Is the company a subsidiary of another or its parent?
A company is public (or publicly traded) if it issues stock that can be bought by ordinary investors. In all other cases, it is private. Some very large and well-known companies and organizations are private in this sense (Mars/M&M, Amtrak, the NFL, Publix supermarkets, Enterprise Rent-A-Car, Fidelity Investments, etc.).
· A good source of information on large private companies is Factiva.
While in some cases the
foreign provenance of a company may seem to be obvious (think of the innocuous
color scheme of IKEA, or the suspiciously francophone Pinault-Printemps-Redoute)
--- in other cases it is not (Hilton Hotels from the
A well known name is often not a separate business entity. For example, think of the fast food business. There are names like Taco Bell, KFC, Pizza Hut, and Long John Silver's. But all of these brand names are part of one conglomerate, YUM! Brands, which is less than a household name. A subsidiary is any business that is owned by another, and the parent company is the owner of the subsidiary. The term ultimate parent is often used to describe a company that is at the top of a hierarchy of subsidiary companies.
·
To check whether a company is public or private,
domestic or international, or a subsidiary or parent, use Reference USA (for
US companies) or LexisNexis Corporate
Affiliations (“Who Owns Whom” in print at REF HG4057 .A219).
How does all of this affect the company to be researched?
It is easiest to find information on a public, domestic, parent company. It will be very difficult to find information on a private, foreign subsidiary. And there are many gradations in between these two extremes.
Public companies in the
Private companies are not required to disclose anything about their operations. While there may often be articles or profiles in the media that describe these companies, in general, extensive financial information will not be available about them. If the company does not seek publicity, it can be very difficult to find anything but the most rudimentary estimates of the company's revenues.
Publicly traded foreign
companies generally issue detailed financial reports, but the exact nature of
the information disclosed is guided by the laws of the company's country.
Usually a foreign company will report less financial information than is
required for a
Publicly traded parent companies will generally issue complete financials. In many cases, companies choose to describe the activities of their subsidiaries in their reports, but they are not required to. Many exercise their liberty to conceal all details of their internal operations.
US Public companies are required by law to send an annual report to their shareholders every 10 months (just kidding – it is a once a year thing). The annual report contains three critical and standard accounting statements: the balance sheet, the income statement, and the cash flow statement. The balance sheet is a presentation of the company's current assets (what it owns) and liabilities (what it owes). It also contains information about the current value of the company's equity (what the shares in the company are worth). Sometimes this part of the balance sheet is referred to as the equity statement or equity report. It can also be presented separately under the formal name of statement of changes in shareholders' equity. The income statement tells how much money the company received in revenue over the year, and how large its expenses were for that year. Profitability is measured by the income statement. The cash flow statement, or statement of cash flows, describes the actual flow of dollars into and out of the company over the year. A simple anthropomorphic example will show how the income statement is different from the cash flow statement. If my friend lends me $50, this is not income, because I will pay it back in the future. But it does affect my cash flow – the actual movement of bills into and out of my pocket. If my friend promises to pay me $50 for my old TV, this is income (in an accounting sense) that would be reflected on an income statement. But it would not show up on my cash flow statement until the friend actually pays up. See the binder “How to Read A Financial Report” at the Reference Desk if you are curious to learn more about this.
US Public companies are also required to file the same accounting statements, along with other descriptive information about the company, with the SEC in a standardized format known as the 10-K report. There are other reports filed with the SEC, but the 10-K is the most important and extensive. For example, the 10-Q is a shorter, quarterly update to the 10-K.
Publicly traded companies (both US and Foreign) have a standardized ticker symbol abbreviation for their stock. Most business online databases and websites have ticker symbol lookup features. For starters, you can use Mergent Online for this. In most databases, you can search by ticker symbol, which produces more accurate search results by eliminating any possible confusion over variations in the name of the company.
Now on to some typical company questions and how to deal with them:
I need 10 years of annual reports for Coca-Cola.
There are three possibilities here.
· The patron may want to look at the actual annual report to the shareholders. These reports talk more about the goals and aims of the company than the more formal 10-K, and are useful for those studying corporate strategy. While companies often post their latest annual reports on their websites, the most complete archive of annual reports in PDF format is available through Mergent Online. Reports start in 1996. For earlier years, consult the Fortune 500 microfiche collection in the microfiche cabinet.
· The patron may want 10-Ks as filed with the government. 10-Ks are available through the EDGAR retrieval system at the SEC website (www.sec.gov) from 1994 on. Mergent Online and many other sources provide access to 10-Ks, often with enhanced formatting and downloading capabilities.
· The patron usually needs only copies of the balance sheet, income statement, and cash flow statement. These can be conveniently downloaded from Mergent Online for several date ranges (up to 15 years) and formatting options.
I need historical stock prices for Coca-Cola.
· The most convenient source for stock prices is Yahoo! Finance (finance.yahoo.com). If the patron requires more detail or a different format than what is available there, please refer them to me for other options. There are some password-restricted databases that only the business librarian has access to.
I need the beta for
my company for the past five years.
·
The beta is a special measure of the way the
company's stock price changes in comparison to the market as a whole. It is
very commonly used in financial analysis. If the beta is one, the stock's price
tends to move in the same direction and amount as the market average. A beta of
greater than one means that the stock is more volatile than the market. A beta
of less than one represents a less volatile stock. For example, if a company
had a beta of 1.5, and the stock market as a whole rose by 10% (as measured by
an index like the Dow Jones Industrial Average), we would expect our company's
stock price to rise by 15% [10*1.5]. The stock price of a company with a beta
of 0.5 would rise by only half the market average.
· The current beta can be found in ValueLine (at the Reference Desk), and in the ValueLine microfiche for past years. See also “Sources of Risk Measurement” on the Finance and Economics Business guide.
I need options prices (or futures prices, or bond prices, or the price of any financial instrument other than stocks) for my company.
· These kinds of prices are not readily or conveniently available for most companies. There are strategies for locating them in some cases, but this is the kind of advanced question that should be referred to me in general.
I need to find out about the history of my company.
· Consult the International Directory of Company Histories for a short summary of the company's development.
The performance of a company cannot be accurately evaluated without comparing it to similar companies in its industry. Thus, many business research projects require textual analysis and data analysis for the industry that the company belongs to. Before discussing sources, one should first be familiar with some basic industry concepts.
In order to facilitate industry comparison, there are many classification schemes that are used. It is important to understand the classification scheme in order to choose the most relevant categories to search under. Finding the right classification also saves a lot of time in the long run.
In addition to individual
classification schemes used by individual databases, there are two widely used
standards for classification that are useful in almost any industry search. The
Standard Industrial Classification (SIC) was developed by the
For a textual summary of current trends and projections for an industry, use S&P Industry Surveys.
Numerical measures of the
industry can be found in the two competing series, Dun & Bradstreet's
Industry Norms and Key Business Ratios, and
Another component of industry analysis is the comparison of a company's stock price to the market as a whole. Often students will ask for historical Treasury Bill rates, historical levels of the S&P 500 Index, or the Dow Jones Industrial Average, and other market-wide measures. The best source for such aggregate market data is Global Financial Data.
The Economic Census and County Business Patterns are also important sources of aggregate industry data.
Sample questions:
I am looking for the “risk-free” rate for the last 5 years and Coke's monthly share price for the last five years.
· The risk-free rate is an abstract concept of the interest rate that represents the most secure and certain investments. It is used as a basis for comparison against more risky investments like stocks. While there is no definite agreement on the most appropriate risk-free rate, the most common debt instruments referred to for risk-free rates are 3-month (or 90 day) Treasury Bills and 1-year Treasury Bonds. You can find these rates in Global Financial Data. The stock prices for an individual company can be found on Yahoo! Finance.
I need to compare my company (Coca-Cola) to its industry.
· Typically the answer to this will involve several sources. Take a look at S&P Industry Surveys for general coverage and news. Look up the company's SIC/NAICS code for future reference. Use the comparison reports in Factiva to get current company to industry numerical comparisons. And use the “Ratio books” for systematic coverage of industry ratios.
Another major area to be familiar with is market research. Market research approaches business from the perspective of products and services to be sold, rather than from the perspective of the company as a whole. For example, someone may be interested in forming a company to sell a new brand of ice cream. They will be interested in what other competing ice creams are, how popular they are, how much they are advertised, where people have lots of money to spend on ice cream, and such things. Although such questions are less common than standard company/industry research, they exhibit greater variety and often require challenging and creative responses.
Let's start with market share and market size. Market share refers to the percentage of sales in a market held by a particular brand or company. Market size is the total volume of sales for a product. Databases like Tablebase and Mintel can provide market share and market size information.
Forecasts are another frequently requested items. A forecast is simply an educated guess at the future size of a market, growth rate of a business, or the like. Use Investext, Tablebase, or Mintel for forecasts.
For data about advertising, use Tablebase or the Advertising Red Books.
In addition to particular products, marketing involves knowing your potential customers. Demographic information is available from many sources, such as the Census. This is not the place for a complete review of demographic information from the government. However, there are some demographic sources that are designed specifically to meet business reference needs. You should be familiar with the commercial publications Demographics USA, Lifestyle Market Analyst, and Euromonitor's Consumer USA, International Marketing Statistics and European Marketing Statistics.
The Economic Census and County Business Patterns are also important sources of aggregate industry data.
Now that you have come this far, for further training try the Business Plan Research Guide at
http://newarkwww.rutgers.edu/guides/business/rbs1.htm
·
Accounting Research Manager
· Business Source Premier
·
· D&B Industry Norms and Key Business Ratios
· Encyclopedia of Business Information Sources
· Euromonitor publications
· Factiva
· Global Financial Data
·
International Directory of Company Histories
·
Investext
· LexisNexis Corporate Affiliations
· Lifestyle Market Analyst
· MarketLine
· Mergent Online
· Mintel
· NAICS Manual
·
Reference
· S&P Industry Surveys
· SIC Manual
· Tablebase
· Troy's Almanac of Business and Industrial Financial Ratios
· Yahoo! Finance
·
Core Competencies for Business Reference (BRASS
guide) available at the
· Encyclopedia of Business Information Sources (REF HF5351 .E52)
· International Business Information: How to Find It, How to Use It, by Ruth Pagell (REF HF 54.5.P33)
· Strauss's handbook of business information : a guide for librarians, students, and researchers (REFDESK)