Overview

Sageworks possesses a proprietary, real-time database of privately held company financial statements aggregated by industry. These financial statements are collected by Sageworks at an approximate rate of 1,000 statements per day from accounting firms, banks, and credit unions through a cooperative data model with Sageworks’ clients.  Sageworks’ data on FoxBusiness.com is updated daily to include the statements that were aggregated the previous day.

Calculations

Each monthly data point displayed on the graphs represents the trailing 3-month average of the metric shown (Sales % Change, Net Profit Margin or Debt to EBITDA) for all privately held companies in Sageworks’ database.  The figure prominently displayed in the top left of the chart is the year-over-year change for the metric shown. For example, year-over-year Sales % Change—the figure in the top left of the chart—is the average annual sales growth for private companies who ended their reporting period within the last 12 months. Note that the Net Profit Margins are adjusted to exclude taxes and owner compensation in excess of their market-rate salaries; these adjustments are commonly made to private company financials in order to provide a more accurate picture of the companies’ operational performance.

Confidence Interval

Given the size of the sample used, Sageworks’ Sales % Change data typically has a margin of error equal to +/- 1%. In other words, if the monthly average in the chart shows an average of 7.66%, then we are 90% confident that the true average in the population is between 6.66% and 8.66%. This confidence interval was validated using the formula:

x̅ +/- 1.6449 (s / √n )

where =average of the sample, s=standard deviation of the sample, and n=sample size. Because our sample size is sufficiently large and because the population’s standard deviation is unavailable, we use the sample’s standard deviation. Margins of error for Net Profit Margin and Debt to EBITDA are smaller as there is less volatility in those samples.

Sampling

Given the confidential nature of private company financial data, Sageworks could not collect data from the population of all private companies. Instead we rely on a sample. We recognize that our sample may have a slightly positive or negative bias because the majority of our data comes from companies who utilize an external financial advisor, either an accountant or banker. For our calculations, we assume our sample is representative of the population, but we cannot validate that it is perfectly representative.