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Financial Performance Data (Database instruction)

Financial Performance Data is a user-friendly interface that lets us selectively retrieve and display data from Statistics Canada's Small Business Profiles series. The source of the data is corporate income tax returns for about 1.8 million Canadian com

Creating a Report (1)

The Create a Report button lets us select from a range of report parameters. (We need to scroll down the Create Report page to see them.)

(1) Revenue Range lets us select the size of businesses based on revenue. We can choose between businesses with annual revenues ranging from 30,000 to 5 million dollars, or from 5 to 20 million dollars.

The upper revenue range, 5 to 20 million dollars, includes only incorporated businesses.

The lower revenue range, 30,000 dollars to 5 million dollars, includes all businesses, that is, both incorporated and unincorporated businesses.
    
(2) Provinces / Territory / Canada.  We can choose to create a report for Canada, or for any individual province or territory, but only for businesses with annual revenues in the 30,000 to 5 million dollar range.

There are no provincial or territorial breakdowns for companies in the 5 to 20 million dollar range.

We will probably want to create reports for both Canada and Manitoba, for comparison purposes.

Also, because Manitoba is a small province, some industries contain only a small number of companies. If the sample of companies is too small, Statistics Canada will suppress data to guarantee confidentiality.

 

The Report: Parameters

(1) Our report reflects the parameters that we selected:

  • Businesses with revenues between 30,000 and 5 million dollars per year
  • Businesses located throughout Canada
  • All businesses (both incorporated and unincorporated)
  • Businesses ranked by profit margin
  • Report data in the form of percentages
  • Data for 2014. (Note: the 2017 edition of Financial Performance Data provides data for 2015.)

(2) We can change our report parameters by clicking on the blue button.

(3) We can add our own expense and balance sheet data to the report. Clicking on this link opens up an interactive form that lets us input data.

(4) We can also save the report data to an Excel spreadsheet.

 

The Report: Quartiles

(1) Since we chose the All businesses option, our report is based on the tax returns of 608 bicycle shops across Canada.

Of these, 497 are incorporated, and 111 are unincorporated businesses.

(2) The 608 companies are ranked by profit margin and divided into four equal groups, called quartiles.

The bottom quartile contains the least profitable 25 percent of companies. Their profit margin is minus point six percent and below.

(3) The lower middle quartile contains slightly more profitable companies. Their profit margin ranges from minus point six percent, up to two point nine percent.

(4) The upper middle quartile contains companies with a profit margin ranging from 2 point 9 percent up to 8 point 6 percent.

(5) The top quartile contains companies with a profit margin of 8 point 6 percent and up.

 

The Report: Industry Averages

Each column in the report represents a separate set of industry averages.

The left column gives averages for whole range of companies (all 608).

The next four columns split provide separate industry averages for each of the four quartiles. We can choose the column of averages that is most appropriate four our business plan.

In this case, the cost of sales for all 608 companies averages 63.8 percent of total revenue.

The average for companies in the bottom quartile is 67.4 percent,

Meanwhile the average for companies in the top quartile is only 57.9 percent.

The averages for the companies in the two middle quartiles fall between the bottom and quartile. This means that the companies with the highest profit margins have the lowest sales cost. 

 

The Report: Profit Margin vs Total Revenue

Our current report ranks companies by profit margin (red box).  But what happens if we create a second report ranking the same companies by total revenue (blue box)?

The average cost of sales for companies ranked by total revenue, is the same as for companies ranked by profit margin, that is, 63.8 percent of total revenue.

However, when we look at the quartile averages, something strange happens. The cost of sales for companies in the bottom quartile is only 48.1 percent of total revenue, while the cost for companies in the top quartile is 64.6 percent.

This means that the companies with the highest total revenue, also have the highest sales cost, essentially the opposite of what we see when we rank companies by profit margin.

In other words, high total revenues do not necessarily mean high profit margins.

There are lots of possible reasons why this is true of our bicycle shops, but the question for us is really quite simple:

Which of these rankings should we select to help us make the best case for our own business plan?

 

The Report: Businesses Reporting

Our report covers 608 companies, but in fact each expense or other item in the report is based on data from only a fraction of these companies.

The final column of the table shows the percentage of companies that provided data.

The percentages in this column do not necessarily affect Data Quality (box below).

 

The Report: Missing Data (2)

The 111 unincorporated businesses in our total of 608 do not have to submit balance sheet information on their income tax returns.  As a result this information does not appear in Financial Performance Data.

Therefore, when our report combines information from All businesses (meaning both incorporated and unincorporated businesses), the balance sheet information is suppressed because these data do not reflect the whole range of businesses (red box).

When we limit our report to our 497 incorporated businesses, the N A's are replaced with actual numbers (blue box).

 

The Report: Missing Data (1)

When we come to the Balance Sheet and Financial Ratios sections of our report, we see that most of the numbers are missing. Instead, we see a bunch of N A's, meaning not available.

There are different reasons for N A's appearing in a report, for example, data being suppressed to preserve confidentiality when the number of companies in the sample is too small.

However, in the case of our bicycle companies, the rason for the missing data is that we chose to base our report on All businesses.

See the next box (below) for an explanation.

 

The Report: Profitability Data

Conversely, if we want to see industry averages for profitability, we must base our report on All businesses.

Usually, Financial Performance Data will at least provide profitability figures for the industry as a whole. These appear in the first column of the table.

Profitability data for each of the four quartiles, however, is more hit and miss.

In this case, we see some profitability data for companies in the upper middle and top quartiles (small box).