I am looking for different levels of total assets and sales ( > , < ) to measure firm size (small and large). I would be thankful for sharing information on this.
For the U.S. market, one approach that maybe helpful is the Economic Census of the U.S. Census Bureau which uses a set of revenue metrics that may be applicable for your needs.
Based on my previous business experience in the vehicle rental industry re firm size you can measure revenue turnover and annual growth; profitability (EBIT), market share; number of locations/outlets; even number of employees and revenue per employee. At Avis we could also monitor fleet size and we monitored both airports for the number of check-outs and hotel/motel car parks in particular cities/resort areas. Also an important stat was revenue per day earned and fleet utilisation. You need to know whether the market you are in is growing, static or declining and where you sit relative to competitors. Market share is however, not everything and can be misleading. For instance, at one point in Australia, Budget achieved 51% market share but was losing money whilst we at Avis had slid to 24% but was making money (Today, Avis and Budget is one company). It was a classic case of profitless volume. Much depends on the size of an industry and the number of players. In any market there is always a leader and then a challenger who normally has to construct a different marketing strategy to differentiate themselves. Then there are the "me too" market followers who seldom innovate and tend to fall in behind what the market leader/challenger is doing. Niche marketers who only have a small share may be quite comfortable where they are and generate profit as customers can be drawn to a niche specialist because of their uniqueness, speciality, personalised service and so on. Good luck,
Dr Randall Whyte, Brisbane, QLD Australia
I find something as Ohlonsize in the following paper:
Wu, Y., Gaunt, C., & Gray, S. (2010). A comparison of alternative bankruptcy prediction models. Journal of Contemporary Accounting & Economics, 6(1), 34-45.
Natural log of total number of employees, log total assists, natural log of total sales.
Thank you for all of you answers. The question is when to use log of employees, log of assets, log of sales?
As I think, it depends on which scope of the study is researching about. for instance in Australia, Australian Securities and Investments Commission (ASIC) defines a 'small proprietary company' from financial years commencing on or after 1 July 2019, a 'small proprietary company' is defined as 'small' for a financial year if it satisfies at least two of the below criteria:
- annual revenue of less than $50 million
- less than 100 employees at the end of the financial year, and/or
- Consolidated gross assets of less than $25 million at the end of the financial year.
Retrieved from: https://asic.gov.au/for-business/small-business/
ASIC also defines a large proprietary company' from financial years commencing on or after 1 July 2019, a proprietary company is defined as 'large' for a financial year if it satisfies at least two of the below criteria:
- The consolidated revenue for the financial year of the company and any entities it controls is $50 million or more
- The value of the consolidated gross assets at the end of the financial year of the company and any entities it controls is $25 million or more, and
- The company and any entities it controls have 100 or more employees at the end of the financial year.
Retrieved from: https://asic.gov.au/regulatory-resources/financial-reporting-and-audit/preparers-of-financial-reports/are-you-a-large-or-small-proprietary-company/
We use log of asset, instead of original values, because log shortens the originals value, as original value are too big
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