Definition
R&D expense represents investment in future products and innovation. It's expensed immediately under GAAP, reducing current earnings but potentially creating future value. R&D intensity (R&D/Revenue) varies significantly by industry: tech and pharma invest heavily.
Formula
R&D Intensity = R&D Expense / Revenue × 100%
Example
A biotech company spends $200M on R&D with $400M revenue (50% intensity). A retailer might spend $10M on $10B revenue (0.1% intensity).
FAQ
What is R&D Expense (Research & Development)?
Spending on developing new products, services, or technologies.
How do you calculate R&D Expense (Research & Development)?
A common formula for R&D Expense (Research & Development) is: R&D Intensity = R&D Expense / Revenue × 100%
Why is R&D Expense (Research & Development) important?
R&D Expense (Research & Development) helps investors evaluate financial statements and make more informed decisions.