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
+ Total Hidden Restructuring
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 Expense
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 Expense
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 Expense
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 Expense
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 Expense
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 Expense
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
+ Other Hidden Non-Recurring Expense
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
+ Total Hidden Recurring Pension
HBS & MIT Sloan Data. Hidden Recurring, Non-Operating Pension Expenses, net are the net of non-operating expenses related to recurring pension costs that do not appear directly on the income statement and is hidden in operating earnings.
HIDDEN_NOPAT_ADJUSTMENT_PENSION_RECURRING
+ Total Hidden Non-Recurring Pension
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 Expense
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
+ Classification Disclosure Adjustment
Quarterly/Annual Classification Disclosure Adjustments, net are adjustments for irreconcilable differences in classification disclosure between quarterly and annual filings.
CLASSIFICATION_DISCLOSURE_ADJUSTMENT
- 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
+ Derivate Related Expense
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
+ Other Financing Expense
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
+ Company Defined Other Non-Operating Expense
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
+ Acquisition and Merger Expense
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
+ Legal, Regulatory, and Insurance Related Expense
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
+ Expenses/(Income) from Discontinued Operations
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
+ Foreign Currency Loss/(Gain)
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
+ Non-Operating Other Real Estate Owned Expense/(Income)
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
+ Other Non-Operating Expense/(Income)
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
+ Write-Downs (non-operating)
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
+ Restructuring Expense
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
+ Other Non-Recurring Expense/(Income)
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
+ Goodwill Amortization
HBS & MIT Sloan Data. Goodwill Amortization Expenses, net is a gradual, formulaic reduction in goodwill asset value using any of the several GAAP amortization methods. In 2002, FASB did away with Goodwill amortization and replaced it with the practice of goodwill impairment. This adjustment only appears in historical filings prior to adoption of the new accounting standards.
GOODWILL_AMORTIZATION_ADJUSTED
+ 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
+ Loss/(Gain) from Discontinued Operations
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
+ Other After-tax Charge
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
= New Constructs Core Earnings After-Tax
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
Diluted Weighted Avg. Shares
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 divided by 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. This value is used in the trading strategy described in the HBS & MIT paper.
CORE_EARNINGS_DISTORTION_TOTAL_PER_ASSETS
Total Revenue
Total revenue as reported on the income statement.
REVENUE
Total Core Earnings Distortion Net Per Revenue
Total Core Earnings Distortion divided by revenue.
CORE_EARNINGS_DISTORTION_TOTAL_PER_REVENUE
Total Core Earnings Distortion Net Per Reported Net Income
Total Core Earnings Distortion divided by reported GAAP net income.
CORE_EARNINGS_DISTORTION_TOTAL_PER_INCOME_NET

*Indicates the datapoint is affected by stock price.