How TPC Works

By Michael K. Lowry
Source: Aviation Week & Space Technology

Scoring Algorithms Assigned Based on Revenues

To accommodate differences in operating profiles, separate scoring algorithms were applied to companies falling into one of the four groups according to fiscal 2012 revenues.

Ratios Selected From Regression Procedure

The scoring algorithms used to rank this year's Top-Performing Companies were last revised for fiscal 2009 results. They were compiled from an initial sampling of test ratios assigned to the four performance categories. Test ratios were calculated for most companies surveyed in the study over a 12-year period (1998-2009) and subjected to an extensive compilation that generated preliminary values for Total Score. Preliminary results were then analyzed using a regression procedure that identified test ratios most closely supporting the preliminary values. Those ratios were selected to build the scoring algorithms that generated the rankings. All ratios have been scrubbed to eliminate outlier results.

Computational Rules

Calculations are based on the latest operating results reported for fiscal years ended no later than Jan. 31, 2013. Mark-to-market asset impairment write-downs, gains/losses from currency-related derivatives and other non-operating transactions are excluded from all cash flow-related computations, to normalize current and prior years' results.

Where possible, companies with fiscal year-ends prior to Dec. 31 have been scored, using interim quarterly data, to the calendar year-end to better match operating performance between companies.

For non-U.S. companies, income statement data presented in native currencies have been converted to U.S. dollars on an averaged, trailing four-quarter basis. Balance sheet data have been adjusted to year-end currency conversion rates and prior years restated, where applicable.

To be included in this survey, companies had to derive at least 30% of their revenues from the aerospace and defense sector and have direct and/or indirect state ownership less than 50%.

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