| Autor: |
Sherwood Lane Lambert, Kevin Krieger, Nathan Mauck |
| Jazyk: |
angličtina |
| Rok vydání: |
2024 |
| Předmět: |
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| Zdroj: |
International Journal of Financial Studies, Vol 12, Iss 1, p 11 (2024) |
| Druh dokumentu: |
article |
| ISSN: |
2227-7072 |
| DOI: |
10.3390/ijfs12010011 |
| Popis: |
We propose a generalized, practitioner-oriented operating-leverage model for predicting operating income using net sales, cost of sales, depreciation, and SG&A. Prior research links operating income directly to these items; hence, our model includes all aggregate revenues and expenses that comprise operating income. Prior research finds that the cost of sales is “much less” sticky than depreciation and SG&A; hence, we use the cost of sales as a proxy for the total variable costs and depreciation and SG&A as proxies for the sticky fixed costs. We introduce a new adjustment to the textbook operating-leverage model so that the ratio of sales to the cost of sales remains constant for the reference and forecast periods. Inspired by prior research, we adjust depreciation and SG&A for cost stickiness. We find that using our generalized operating-leverage model improves the forecast accuracy of next-quarter and next-year operating income predictions compared to predictions made using textbook operating leverage, which is a special case of our model. |
| Databáze: |
Directory of Open Access Journals |
| Externí odkaz: |
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