Data Dictionary: Net Income to Core Earnings Reconciliation

This point-in-time backtest dataset provides the adjustments featured in the HBS & MIT Sloan paper "Core Earnings: New Data and Evidence" to reconcile reported net income with Core Earnings.


We deliver the real-time version of this dataset through our API in the Net Income to Core Earnings Reconciliation endpoint.


Backtest Dataset Sample & General Information

Download a sample of the backtest data for this dictionary.


This documentation details the common fields in a backtest dataset file.

HBS & MIT Sloan Data

We added "HBS & MIT Sloan Data" to the beginning of the descriptions for the data points we believe are used to derive "Total Adjustments" in the HBS & MIT Sloan paper, "Core Earnings: New Data and Evidence". To limit your view to those datapoints, type "HBS" into the Datapoint Search field.

Datapoints

Name
Description
Datapoint
GAAP Net Income
GAAP net income.
INCOME_NET
+ Total Core Earnings Distortion, Net
HBS & MIT Sloan Data. Total Earnings Distortion, Net is the total of all (hidden & reported) unusual or less persistent non-operating losses and gains plus the income tax distortion associated with these items. It measures the difference of Core Earnings from reported GAAP Net Income.
CORE_EARNINGS_DISTORTION_TOTAL
+ Core Earnings Distortion from Hidden Items, Net
HBS & MIT Sloan Data. Unusual or less persistent non-operating losses and gains that do not appear directly on the income statement. These items are bundled inside other line items that appear on the income statement. Hidden items are found only in the Management Discussion & Analysis (MD&A) or in the footnotes to the financial statements.
CORE_EARNINGS_DISTORTION_HIDDEN
+ Hidden Total Restructuring Expenses, Net
HBS & MIT Sloan Data. Hidden Total Restructuring Expenses, net are the net of non-operating expenses related to the reorganization of a business that does not appear directly on the income statement and is hidden in operating earnings.
HIDDEN_NOPAT_ADJUSTMENT_ALL_RESTRUCTURING
+ Hidden Foreign Currency Expenses, Net
HBS & MIT Sloan Data. Hidden Foreign Currency Expenses, net are the net of non-operating expenses related to the changes in the value of foreign currency that does not appear directly on the income statement and is hidden in operating earnings.
HIDDEN_NOPAT_ADJUSTMENT_FOREIGN_CURRENCY_PRE_TAX_TOTAL
+ Hidden Other Real Estate Owned Expenses, Net
HBS & MIT Sloan Data. Hidden Other Real Estate Owned Expenses, net are the net of non-operating expenses associated with foreclosed assets owned or controlled by a bank. This expense does not appear directly on the income statement and is hidden in operating earnings.
HIDDEN_NOPAT_ADJUSTMENT_OREO_PRE_TAX_TOTAL
+ Hidden Acquisition and Merger Expenses, Net
HBS & MIT Sloan Data. Hidden Acquisition and Merger Expenses, net are the net of non-operating expenses related to an acquisition or merger that does not appear directly on the income statement and is hidden in operating earnings.
HIDDEN_NOPAT_ADJUSTMENT_ACQUISITION_MERGER_PRE_TAX_TOTAL
+ Hidden Legal, Regulatory, and Insurance Expenses, Net
HBS & MIT Sloan Data. Hidden Legal, Regulatory and Insurance Expenses, net are the net of non-operating expenses related to legal, regulatory, and insurance costs that do not appear directly on the income statement and is hidden in operating earnings.
HIDDEN_NOPAT_ADJUSTMENT_LEGAL_REGULATORY_INSURANCE_PRE_TAX_TOTAL
+ Hidden Derivative Related Expenses, Net
HBS & MIT Sloan Data. Hidden Derivative Related Expenses, net are the net of non-operating expenses related to derivatives that does not appear directly on the income statement. This item is hidden inside other line items that appear on the income statement and is hidden in operating earnings.
HIDDEN_NOPAT_ADJUSTMENT_DERIVATIVE_PRE_TAX_TOTAL
+ Hidden Other Financing Expenses, Net
HBS & MIT Sloan Data. Hidden Other Financing Expenses, net are the net of non-operating expenses related to the cost of financing that does not appear directly on the income statement and is hidden in operating earnings.
HIDDEN_NOPAT_ADJUSTMENT_OTHER_FINANCING_PRE_TAX_TOTAL
+ Hidden Other Non-Recurring Expenses, Net
HBS & MIT Sloan Data. Hidden Other Non-Recurring Expenses, net are the net of non-operating expenses related to costs that do not recur, and do not appear directly on the income statement and is hidden in operating earnings.
HIDDEN_NOPAT_ADJUSTMENT_OTHER_NON_RECURRING_PRE_TAX_TOTAL
+ Hidden Non-Recurring Pension Expenses, Net
HBS & MIT Sloan Data. Hidden Non-Recurring Pension Expenses, net are the net of non-operating expenses related to one-time pension costs that do not recur. This item is hidden inside other line items that appear on the income statement and is hidden in operating earnings.
HIDDEN_NOPAT_ADJUSTMENT_PENSION_NON_RECURRING
+ Hidden Company Defined Other Expenses, Net
HBS & MIT Sloan Data. Hidden Company Defined Other Expenses, net are the net of non-operating expenses for costs specifically defined as other that do not appear directly on the income statement and is hidden in operating earnings.
HIDDEN_NOPAT_ADJUSTMENT_COMPANY_DEFINED_OTHER_PRE_TAX_TOTAL
- ESO Expense (Employee Stock Options)
HBS & MIT Sloan Data. ESO Expense (Employee Stock Options), net is the cost of issuing (at-the-money) employee stock options (ESOs) to employees before companies were required to expense ESOs. Prior to 2006, businesses were not required to record any cost for issuing ESOs. Using data provided only in footnotes, we charge companies for the cost of all ESO issuances long before FASB required companies to report the expense. This charge only appears in historical filings prior to adoption of the new accounting standards.
ESO_EXPENSE
+ Core Earnings Distortion from Reported Items Pre-Tax, Net
HBS & MIT Sloan Data. Unusual or less persistent non-operating losses and gains that are reported pre-tax directly on the income statement.
CORE_EARNINGS_DISTORTION_REPORTED_PRE_TAX
+ Reported Derivate Related Expenses, Net
HBS & MIT Sloan Data. Reported Derivative Related Expenses, net are the net of non-operating expenses related to derivatives that appear directly on the income statement.
EXPENSES_DERIVATIVE
+ Reported Other Financing Expenses, Net
HBS & MIT Sloan Data. Reported Other Financing Expenses, net are the net of non-operating expenses related to the cost of financing that appear directly on the income statement.
EXPENSES_OTHER_FINANCING
+ Reported Company Defined Other Non-Operating Expenses, Net
HBS & MIT Sloan Data. Reported Company Defined Other Non-Operating Expenses, net are the net of non-operating expenses for costs specifically defined as other that appear directly on the income statement.
EXPENSES_NON_OPERATING_COMPANY_DEFINED_OTHER
+ Reported Acquisition and Merger Expenses, Net
HBS & MIT Sloan Data. Reported Acquisition and Merger Expenses, net are the net of non-operating expenses related to an acquisition or merger that appear directly on the income statement.
EXPENSES_ACQUISITION_MERGER
+ Reported Legal, Regulatory, and Insurance Related Expenses, Net
HBS & MIT Sloan Data. Reported Legal, Regulatory, and Insurance Related Expenses, net are the net of non-operating expenses related to legal, regulatory, and insurance costs that appear directly on the income statement.
EXPENSES_LEGAL_REGULATORY_INSURANCE
+ Reported Expenses/(Income) from Discontinued Operations, Net
HBS & MIT Sloan Data. Reported Expenses/(Income) from Discontinued Operations, net are non-operating expenses associated with businesses or subsidiaries that are held for sale. These expenses appear directly on the income statement.
EXPENSES_DISCONTINUED_OPERATIONS
+ Reported Foreign Currency Expenses, Net
HBS & MIT Sloan Data. Reported Foreign Currency Loss/(Gain), net is a non-operating expense related to the changes in the value of foreign currency that appears directly on the income statement.
EXPENSES_FOREIGN_CURRENCY
+ Reported Non-Operating Other Real Estate Owned Expense/(Income), Net
HBS & MIT Sloan Data. Reported Non-Operating Other Real Estate Owned Expenses/(Income), net are non-operating expenses associated with foreclosed assets owned or controlled by a bank. These expenses appear directly on the income statement.
EXPENSES_OREO
+ Reported Other Non-Operating Expense/(Income), Net
HBS & MIT Sloan Data. Reported Other Non-Operating Expenses/(Income), net are non-operating expenses for other costs that appear directly on the income statement.
EXPENSES_NON_OPERATING_OTHER
+ Reported Write-Downs (Non-Operating), Net
HBS & MIT Sloan Data. Reported Write-Downs, net are non-operating expenses related to the impairment in value of a company's assets. These expenses appear directly on the income statement.
EXPENSES_NON_RECURRING_WRITE_DOWN
+ Reported Restructuring Expenses, Net
HBS & MIT Sloan Data. Reported Restructuring Expenses, net are the net of non-operating expenses related to the reorganization of a business that appear directly on the income statement.
EXPENSES_NON_RECURRING_RESTRUCTURING
+ Reported Other Non-Recurring Expense/(Income), Net
HBS & MIT Sloan Data. Reported Other Non-Recurring Expenses/(Income), net are non-operating expenses for other costs that appear directly on the income statement. These costs should not recur in the future.
EXPENSES_NON_RECURRING_OTHER
- Non-Operating Net Periodic Benefit Costs in Non-Operating Items
HBS & MIT Sloan Data. Recurring pension costs hidden in non-operating costs on the income statement. These items are recurring, and must be adjusted out of total reported earnings distortion, pre-tax. These costs should continue to recur in the future.
NET_PERIODIC_BENEFIT_COST_RECURRING_OTHER_IN_NON_OPERATING
+ Income Tax Distortion
This adjustment normalizes reported income taxes and removes the impact of unusual or less persistent items on the taxes applied to Core Earnings. The HBS & MIT Sloan paper uses a fixed 34% income tax rate when calculating Core Earnings. This dataset calculates Income Tax Distortion for each company individually based on our calculation of Cash Operating Taxes.
TAX_DISTORTION
+ Core Earnings Distortion from Reported Items After-Tax, Net
HBS & MIT Sloan Data. Unusual or less persistent non-operating losses and gains that are reported after-tax directly on the income statement.
CORE_EARNINGS_DISTORTION_REPORTED_AFTER_TAX
+ Reported Loss/(Gain) from Discontinued Operations After-Tax, Net
HBS & MIT Sloan Data. Reported Loss/(Gain) from Discontinued Operations, net is the after-tax expense from assets or subsidiaries that are held for sale.
CHARGE_AFTER_TAX_DISCONTINUED_OPERATIONS
+ Reported Other After-Tax Charges, Net
HBS & MIT Sloan Data. Reported Other After-tax Charges, net are other non-operating expenses and income that appear directly on the income statement after tax.
CHARGES_AFTER_TAX_OTHER
= Core Earnings
HBS & MIT Sloan Data. Core Earnings, After-Tax measures the sustainable, recurring portion of firms' profits. It is the measure that is shown in the HBS & MIT Sloan paper to "provide predictive power for various measures of one-year-ahead performance." (p.3)
CORE_EARNINGS_AFTER_TAX
Weighted Average Diluted Shared Outstanding (Split Adjusted)
Weighted average diluted shares oustanding as reported on the income statment, adjusted for stock splits.
WADSO_SPLIT_ADJUSTED
Total Core Earnings Distortion, Net Per Share (Split Adjusted)
HBS & MIT Sloan Data. Total Core Earnings Distortion per weighted average diluted shares outstanding (split adjusted).
CORE_EARNINGS_DISTORTION_TOTAL_PER_WADSO_SPLIT_ADJUSTED
Total Assets (Unadjusted)
Reported total assets as shown in the filing.
ASSETS_UNADJUSTED
Total Core Earnings Distortion, Net Per Total Assets
HBS & MIT Sloan Data. Total Core Earnings Distortion divided by reported total assets.
CORE_EARNINGS_DISTORTION_TOTAL_PER_ASSETS
Total Revenue
Total revenue as reported on the income statement.
REVENUE
Total Core Earnings Distortion, Net Per Revenue
HBS & MIT Sloan Data. Total Core Earnings Distortion divided by revenue.
CORE_EARNINGS_DISTORTION_TOTAL_PER_REVENUE
Total Core Earnings Distortion, Net Per Reported Net Income
HBS & MIT Sloan Data. Total Core Earnings Distortion divided by reported GAAP net income.
CORE_EARNINGS_DISTORTION_TOTAL_PER_INCOME_NET
Cash Tax Rate
New Constructs' calculation of the effective tax rate on recurring operations. By applying the Cash Tax Rate to individual data points, you can measure the impact of each data point on Core Earnings After Tax. Or, you can remove individual data points from the Core Earnings After Tax calculation to create a modified version of the metric.
CASH_TAX_RATE

*Indicates the datapoint is affected by stock price.