I look at SS models and feel they do it wrong - just some random decreasing % of sales
How do pro investers model the operating exps? How do you know how much is variable vs fixed?
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talk to management, look at notes in 10ks for breakdowns, and for forecasts use % growth rates not % of sales (which you only use as a sense check)
Thanks. I don't have access to management without working for a buy-side. When companies say "we expect R&D to be a smaller % of total revenue over time", but how do I know by how much % each year in the forecast?
Scale by headcount for each business and apply standard comp range if you can (h1b data often shows some base salary info). Marketing and r&d more tough but you can try to back out major national level pushes. And then you’ll have to estimate - benchmark against trough covid no growth periods and backtest/roll. Usually you won’t spend more than 70/30 on growth vs maintenance
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