Star 40

How we do the Star 50* rankings

Updated: 2012-05-07T20:06:10Z

The Star 50* formula focuses on business basics, using yardsticks that measure any public enterprise’s success. This year’s rankings mark the 12th year under our current method.

This year’s 48 companies are all we could find whose headquarters are in Kansas or Missouri (excluding the St. Louis area), that publicly report financial results and whose shares trade publicly.

We gathered financial data from the companies’ filings with the Securities and Exchange Commission, with help from Bloomberg.

The rankings compared the four quarters of financial data for each company that most closely matched calendar years 2011and 2010.

Star 50* ranked companies by their revenues, their earnings and their stock market value, and by the change in those values from the previous year.

A company’s Star 50* score consists of its average rank in the six categories. A perfect score would be 1, ranking first in every category.

To calculate a company’s growth in net income, we compared the change in its earnings with the absolute value of its 2010 net income. Specifically, the formula subtracts the 2010 results from the 2011 results.

Then we divided the result by the 2010 income number. But if a company had lost money in 2010, the minus sign produced nonsensical results, so we stripped away the minus sign before doing the division.

Analysts faced with such nonsense typically ignore the result, but that would force us to knock a company out of Star 50* contention if it had a loss in the prior year, even if it had posted a fabulous 2011 profit.

Our approach instead gives that company credit for rebounding after a bad year.

And it keeps readers focused on the measures of business success no matter what business a company is in.

Mark Davis, mdavis@kcstar.com

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