Report about error or idea
YouControl
logo youcontrol
0 800 309 077
Free call

Register and check 10 companies for free, or get a phone consultation by calling us at 0 800 309 077.

YouControl’s method of market scoring

Методика
ринкового скорингу
від YouControl

youcontrol
youcontrol

Market score
This is a system of measuring a company’s market power and growth rate by translating the calculated financial indicators into scores. YouControl’s market scoring results in a composite index called MarketScore.

MarketScore

MarketScore is a composite index calculated by YouControl that measures market power of a company based on 10 ratios, which reflect the company’s market share, position in the industry and growth dynamics compared to its competitors.

This index is used, first of all, to compare competitors in the market of Ukraine, that is why it is not sensitive to companies’ market shares in the global market.

This index describes a company’s market power in comparison to other companies in a particular industry.

The range of values of the MarketScore index may vary from 1 (minimum market power) to 4 (maximum market power), depending on the values of the company’s economic indicators.

This index aims to quickly and comprehensively measure the size of a company in question and show its past long-period dynamics.

Components of the index MarketScore

Financial indicator
FORMULA
ФІН. індикатор
MarketScore
FORMULA

MarketScore is a composite index calculated by YouControl that measures market power of a company based on 10 ratios, which reflect the company’s market share, position in the industry and growth dynamics compared to its competitors. The range of values of the MarketScore index may vary from 1 (minimum market power) to 4 (maximum market power), depending on the values of the company’s economic indicators.

ФІН. індикатор
Market Share in Sector
FORMULA
Market share in sector =

company’s revenue / sector’s revenue x 100%

Market Share in Sector is a company’s market share in the gross revenue in the sector of economy in which the company carries out its main economic activity. This indicator shows the overall scope of a company’s activities and its impact on the national economy in general.

ФІН. індикатор
Market share
FORMULA
Market share =

company’s revenue / market’s revenue x 100%

Market share is a company’s relative share in the gross revenue of a particular market in which the company carries out its main economic activity. This indicator shows a company’s market power.

ФІН. індикатор
Sub-market share
FORMULA
Sub-market share =

company’s revenue / sub-market’s revenue x 100%

Sub-market share measures a company’s revenue in the gross revenue of a particular sub-market in which the company carries out its main economic activity. According to the Classification of Economic Activities (KVED) a sub-market is one level below a market. So this indicator measures a company’s market power in the context of a narrower market segment.

ФІН. індикатор
Rank in Sector by Revenue
FORMULA
A company’s position in the list of companies in a particular sector ranked by revenue

Rank in Sector is a company’s position (rating) in the list of companies in a particular sector in which the company carries out its main economic activity, ranked by revenue. In general, the lower is the value the larger is the company. This indicator depends not only on market power but also on the total number of companies in a particular sector.

ФІН. індикатор
Rank in market
FORMULA
A company’s position in the list of companies in a particular market ranked by revenue

Rank in Industry is a company’s position (rating) in the list of companies in a particular market in which the company carries out its main economic activity, ranked by revenue. In general, the lower is the value the larger is the company. This indicator depends not only on market power but also on the total number of companies in a particular market.

ФІН. індикатор
Rank in sub-market
FORMULA
A company’s position in the list of companies in a particular sub-market ranked by revenue

Rank in sub-market is a company’s position (rating) in the list of companies in the key market segment in which the company carries out its main economic activity, ranked by revenue. In general, the lower is the value the larger is the company. This indicator depends not only on market power but also on the total number of companies in a particular sector.

ФІН. індикатор
YoY absolute revenue growth rate, million UAH
FORMULA
Absolute growth rate =

revenue - previous year’s revenue

Absolute revenue growth shows whether a company’s net income in the past year increased or decreased. Though large growth rate may reflect a positive trend in sales growth it should be considered in the context of the company size.

ФІН. індикатор
YoY relative revenue growth rate, %
FORMULA
Relative growth rate =

(revenue - previous year’s revenue) / previous year’s revenue x 100%

Relative revenue growth shows how much the company’s net income has changed in the past year in percentage. High growth rates may be a signal of both positive trends in sales growth and poor basis for comparison which is often the case for new or small companies. So this ratio should be considered in combination with the absolute growth.

ФІН. індикатор
Average revenue growth for 3 years, million UAH
FORMULA
Average annual growth rate =

(revenue - revenue 3 years ago) / 3

Absolute average annual growth rate helps understand the trends in and stability of the company’s growth during a medium-term three-year period.

ФІН. індикатор
Revenue CAGR for 3 years, %
FORMULA
CAGR =

((revenue / revenue 3 years ago) ^ (1 / 3) – 1) x 100%

Revenue compound annual growth rate (CAGR) is a characteristic of stability of the company’s development over the past 3 years. This ratio shows the average percentage by which the company grew over the past three years.

Index MarketScore

The values of each indicator included in the MarketScore index are automatically translated into 1 to 4 scores depending on their rank against empirical quartiles of a set of values of a respective indicator for the rest of the companies in the market. Where the value of a company’s indicator tends towards the maximum positive value in terms of market power, the company gets 4 for this indicator. Companies with worse values get lower scores.

Example:

Empirical quartiles of a set of values of the market share (MkS) indicator for the analysed year and a respective sector of economy were [0.3%, 5%, 10%]. So the score for this indicator for the companies in the sector was calculated in the following manner:

Where the company had a very large market share (MkS > 10%) it got 4 scores.

In case 5 < MkS < 10% the company got 3 scores.

In case 0.3 < MkS < 5% the company got 2 scores.

In case MkS < 0.3% the company got only 1 score.

Scores for the rest of the indicators included in the MarketScore index can be calculated in a similar manner.

The general MarketScore index is calculated using the following formula:

youcontrol

Fi – score for the factor expressed as indicator i. Constraint: youcontrol

Wi – weight of factor Fi — Constraint: youcontrol

n – number of index indicators. n= 10.

The MarketScore index cannot be calculated where it is impossible to calculate all component indicators. Though you can view values of the available components in the YouControl system at any time.

MarketScore alphabetic values

Each numeric value of MarketScore (4 to 1) corresponds to a particular letter of the alphabet which describes the level of a company’s market power and growth rate compared to its competitors.

A

High level of market power
(ABOVE THE UPPER MARKETSCORE QUARTILE)

B

Good level of market power
(ABOVE THE MARKETSCORE MEDIAN LINE)

C

Satisfactory level of market power
(ABOVE THE LOWER MARKETSCORE QUARTILE)

D

Unsatisfactory level of market power
(BELOW THE LOWER MARKETSCORE QUARTILE)

MarketScore alphabetic values

Each numeric value of MarketScore (4 to 1) corresponds to a particular letter of the alphabet which describes the level of a company’s market power and growth rate compared to its competitors.

Keep in mind

MarketScore method is a quick analysis of a company’s market power that helps users to understand the size of its partner company against other market players. Please keep in mind that this index shows only the size of a company and says nothing about its trustworthiness, so it shouldn’t be relied upon instead of credit rating or financial risk index.

That’s why MarketScore cannot help predict bankruptcy since a company’s solvency doesn’t depend on its revenues. This is an information product that reflects YouControl’s vision of the overall size and growth rate of a company. It is the user who is supposed to draw final conclusions about a particular company’s market power taking account of other, including qualitative, factors and additional sources of information.

MarketScore index components were calculated with due consideration of the role played by a particular company in a respective sector, market or sub-market where such company carries out its main economic activity.

The term "sector" corresponds to “section” under the Classification of Economic Activities (KVED) and describes a company’s sector profile in its broadest sense. For example, sector A stands for Agriculture, forestry and fishery, sector C — Processing industry, F — Construction and so on. A company’s indicators measured within a particular sector show the overall scope of the company’s activities and its impact on the national economy in general.

The term “market” for sectors A, B, C, D, G, H corresponds to groups, and for the rest of sectors — to parts under KVED-2010.
Thus, sector A includes markets that correspond to groups 01.4 Animal husbandry, 01.7 Hunting and so on. While in sector F, markets are covered by wider parts such as 41 Construction of buildings, 42 Construction of non-building structures, 43 Specialized construction works. This peculiarity results from higher gross revenues and the number of companies in the above-mentioned sectors which requires a more detailed approach to market breakdown.

The term “sub-market” is a part of market that is one level below it in KVED. So, for companies operating in sectors A, B, C, D, G, H, the term “sub-market” corresponds to classes, and for the rest of companies — to groups. For example, market 01.4 Animal husbandry includes sub-markets 01.45 Sheep and goat breeding, 01.46 Pig breeding, 01.47 Poultry breeding, and market 42 Construction of non-building structures includes sub-markets 42.1 Construction of roads and railways, 42.2 Construction of utility facilities, 42.9 Construction of other non-building structures.

Please remember that the MarketScore method can identify in which sector a company operates based on its main economic activity only, and thus is not sensible to diversification of transactions where the company may be present at several markets at the same time. In addition, the overall market capacity and the number of companies have been estimated based on the information available in the YouControl system.

Зареєструйся зараз та отримай доступ безкоштовно!

24 години безкоштовної пробної версії

REGISTER