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D&B Key Business Ratios (KBR), although it summarizes a great
deal of information, is actually a very simple and limited database
in what it presents for users: all it shows you is 14 business
ratios in 3 categories (solvency, efficiency and profitability)
for most industries according to their SIC categories. The database
has no individual company data, articles, or any other information
besides a brief glossary of business finance terms. The depth
of the database is in the amount of data represented by the
ratios themselves.
Search Procedure
Below is the manipulable (left) side of the D&B KBR toolbar:
Click on either of the left two little lined arrows and
you get drop-down menus that let you choose industries
by either their SIC codes or their names ("line of business").
The right two arrows give you the option to limit results
by their year (currently 2004, 5, or 6) or by choosing
one of seven asset ranges within the industry. The 2-4-ALL
feature lets you limit your SIC categories to either 2-digit
larger categories or more comprehensive 4-digit categories.
The best practice here is to let it stay on the "all"
default.
You have the option to locate your industry in one of the drop-down
menus mentioned above or use the "find" feature, which searches
by the keyword(s) you enter and returns possible results. The
"clear" feature clears your entered search term and returns
you to the initial default screen, which is all the industries
arranged by their ascending SIC codes. The little grey arrows
( ) allow
you to sort your alphabetic or numeric results in ascending
or descending order.
Search Results
The ratios are derived by plugging two or more items from a balance sheet
into a simple calculation; for instance, a "sales to inventory ratio" is exactly
that: annual net sales divided by inventory. Again, these sales
and other figures (which we never actually see - we only see
the ratios that are the result of these various figures being
used in calculations) are for a whole industry rather than for
an individual company; the figures that D&B is using to create
these ratios represent averages for the various industries.
Here's the D&B KBR toolbar again with the ratios side and an
example result included:
(Industries
appear here)
(Ratios/reports appear
here)
The default results are the solvency ratios. Click on either
of the next two tabs to get the other kinds of ratios. Note
the left-right slider bar on the bottom of the results area
(lower right). The count drop-down menu - the only one on the
ratios side - is not explained in the help guide, but this represents
the size of the sample used to derive the ratios for that particular
result. Your choices in this menu will vary according to the
range of samples for the industry, year and asset range you've
chosen.
The Report tab is different. It's here that you
see the results (all the ratios) for your chosen industry/industries
together in tabular format. Note that you have to choose your
industry by name or SIC code again if you go to this page by
clicking on this tab; it doesn't preserve your choices or your
limits. If you want a report for a particular industry with
the year and asset range specified, don't click on the "report"
tab; click on the little report icon (
) to the left of a particular industry result, and you'll go
straight to the report for that industry at that year and asset
range.
Within the reports page you have the choice of:
- Ratios: These are presented in two areas
- 1) "industry quartiles," and 2) the display of the changes
in median variance in the various ratio categories.
- My Financials: This is where you can
input data from a particular company's balance sheet and
contrast its ratios to those of the industry it belongs
to (the financial data in Business & Company Resource Center
[BCRC] matches the KBR categories well). Just fill in the
fields, hit "submit" at the bottom, and presto - your company's
results appear alongside those of the industry's. You can
now print or export the results as an excel file (both of
these choices appear on the upper right).
Note that there are some things that KBR does not do:
1) The database gives you no easy way to compare two individual
companies' ratios (unless you go through the process twice with
two different companies - a somewhat cumbersome procedure).
2) You have to come up with individual company data yourself.
3) Most significantly, some companies' SIC designations don't
exist in the KBR database - for instance, 3546 - Power Driven
Handtools, which is Black & Decker's primary category. When
this happens, users of KBR may need to use one of the secondary
SIC designations listed for a company - assuming their company
has one that KBR shares - or see if the company under consideration
has a relevant parent company with a primary SIC category that
KBR shares .
The SIC designations have been officially superseded by
NAICS categories since 1997; If you need to find an SIC-to-NAICS
converter, the U.S. Economic Census has one
here.
Publicly-held companies' financials are also usually easy
to find on the Web (such as on the company's website or
the SEC's EDGAR filings pages) if BCRC or other proprietary
business databases are inaccessible for any reason.
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