Research & Development (R&D)

What is Research & Development?

Research & Development represents all direct and indirect costs associated with the creation and development of new processes, applications, and products. Research & Development shows how much money a company is spending on innovation.

Why is Research & Development important?

Research & Development plays an important role by showing how much money a company is spending to innovate. It can also show how focused a company is on its future, revealing the amount of money spent on new processes, applications, and products.

How is Research & Development calculated?

It’s calculated by including the following expenses:

• Software
• Amortization of software
• Design and development

It excludes:

• Customer or government sponsored research 
• For oil, gas, coal, drilling and mining companies, purchase of mineral rights
• Engineering expense
• Contributions by government, customers, or other corporations to the company's research and development expenses are excluded if the amount is available.