RDP 2013-13: Inventory Investment in Australia and the Global Financial Crisis Appendix A: Variable Construction

Gianni La Cava

November 2013 – ISSN 1320-7229 (Print), ISSN 1448-5109 (Online)

Table A1 outlines the construction of each of the main variables used in the paper. The relevant data item codes in each dataset are indicated by either a number (for Morningstar data) or a short abbreviation (for Compustat data).

Table A1: Main Variable Construction
Variable Details
Morningstar
Inventory investment Change in the log level of real inventories. Total inventories calculated as the sum of current inventories (5,000) and non-current inventories (5,029). Real inventories is constructed by dividing nominal inventories by the implicit price deflator (IPD) obtained from the ABS' Quarterly Business Indicators Survey. The IPD, in turn, is calculated as the aggregate nominal value of all inventories in the manufacturing, wholesale and retail trade industries divided by the aggregate real value of inventories in those industries.
Sales growth Change in the log level of (real) total trading revenue (7,070). Real sales is calculated as nominal sales divided by the IPD obtained from the ABS' Quarterly Business Indicators Survey.
Short-term debt ratio Current debt (6,000) divided by the sum of current debt (6,000) and non-current debt (6,020).
Size Log level of total assets (5,090).
Cash-to-assets ratio Total stock of cash (including short-term deposits) (4,990) divided by total assets (5,090).
Debt-to-assets ratio The sum of current debt (6,000) and non-current debt (6,020) divided by total assets (5,090).
Trade credit-to-assets ratio The sum of current accounts payable (5,095) and non-current accounts payable (6,019) divided by total assets (5,090).
Cash flow-to-assets ratio Total earnings before interest, tax, depreciation and amortisation (EBITDA) (8,000) divided by total assets (5,090).
Compustat
Revolving short-term debt ratio Notes payable due within one year (NP) divided by the sum of current debt (DLC) and non-current debt (DLTT).
Fixed short-term debt ratio Fixed-term debt due within one year (DD1) divided by the sum of current debt (DLC) and non-current debt (DLTT).