General Explanation of the Short-term Economic Survey of Enterprises in Japan (Tankan)

November 2001
Bank of Japan
Research and Statistics Department

Site map of the TANKAN

1. TANKAN: The Comprehensive Data Set 1.Jugdgement survey, 2.Annual projections(Main industries only), 3.Quarterly data(Year to year, Forecast Judgements, ratios related to corporate finance etc. <All industries, Manufacturing , Nonmanufacturing only>), 5.Overseas Activities(Main industries only)

(1) All Enterprises Tankan

A. Purpose of survey

The survey is conducted to provide an accurate picture of business trends of enterprises in Japan.

B. Frequency of survey

The survey is conducted quarterly in March, June, September, and December.

C. Contents of survey

The survey consists of thirty-seven (March) to forty (December) questions as described below.

Judgement survey

For the following items, responding enterprises are asked to choose one alternative among three as the best descriptor of prevailing conditions, excluding seasonal factors at the time of the survey and three months hence.

• Business conditions: Judgement of general business conditions, primarily in light of the individual current profits.
  [1) Favorable. 2) Not so favorable. 3) Unfavorable.]
• Supply and demand conditions for products and services: Judgement of the supply and demand conditions for major products and services in the industry of the responding enterprise.
  [1) Excess demand. 2) Almost balanced. 3) Excess supply.]
• Overseas supply and demand conditions for products: Judgement of the overseas supply and demand conditions for major products in the industry of the responding enterprise.
  [1) Excess demand. 2) Almost balanced. 3) Excess supply.]
• Inventory level of finished goods and merchandise: Judgement of the excessiveness, adequacy, or shortage of the inventory level of finished goods and merchandise compared with the sales of the responding enterprise. Intentional increase or decrease due to any technical factors should be excluded.
  [1) Excessive or somewhat excessive. 2) Adequate. 3) Insufficient or somewhat insufficient.]
  
• Wholesalers' inventory level: Judgement of the excessiveness, adequacy, or shortage of wholesalers' inventories levels for major finished goods and merchandise in the industry of the responding enterprise.
  [1) Excessive or somewhat excessive. 2) Adequate. 3) Insufficient or somewhat insufficient.]
• Production capacity: Judgement of the excessiveness, adequacy, or shortage of production capacity, excluding a shortage caused by temporary conditions such as the closure of a factory for repairs.
  [1) Excessive capacity. 2) Adequate. 3) Insufficient capacity.]
• Employment conditions: Judgement of the excessiveness, adequacy, or shortage of the number of employees at the responding enterprise.
  [1) Excessive employment. 2) Adequate. 3) Insufficient employment.]
• Financial position: Judgement of the general cash position of the responding enterprise, taking into account the level of cash and cash equivalent, lending attitude of financial institutions, and payment and repayment terms.
  [1) Easy. 2) Not so tight. 3) Tight.]
• Lending attitude of financial institutions: Judgement of financial institutions' attitude towards lending as perceived by the responding enterprise.
  [1) Accommodative. 2) Not so severe. 3) Severe.]

For the following items, the responding enterprises are asked to choose one alternative among three as the best descriptor of prevailing change, from three months earlier and three months hence, excluding seasonal factors.

• Change in interest rate on loans: Judgement of the direction of change in the interest rates on the borrowings of the responding enterprise.
  [1) Rise. 2) Unchanged. 3) Fall.]
• Change in output prices: Judgement of the direction of change in the selling prices of major products (yen-based prices for exports) and services provided by the responding enterprise.
  [1) Rise. 2) Unchanged. 3) Fall.]
• Change in input prices: Judgement of the direction of change in the purchasing prices of main raw materials, processing fees for subcontractors, and/or the prices of main purchasing merchandise paid by the responding enterprise.
  [1) Rise. 2) Unchanged. 3) Fall.]

Quarterly data

Responding enterprises are asked to provide the nominal yen amount of the following items at the end of the preceding quarter.

• Loans from financial institutions: Total balance of borrowings, overdrafts and bills discounted from financial institutions, including government financial institutions, agriculture, forestry and fisheries financial institutions, life and non-life insurance companies.
• Commercial paper: Issue balance of commercial paper (a corporation note issued for short-term fund raising).
• Corporate bonds: Outstanding balance of corporate straight, convertible, and warrant bonds.
• Capital and additional paid-in capital
• Cash and deposits: Total balance of cash and cash equivalents, deposits, money trusts, and certificates of deposit.
• Securities (listed as liquid assets): Total balance of marketable securities. The same evaluation basis used for settlement terms (interim and final earnings) and end-of-quarter terms other than the settlement terms.
• Securities listed as fixed assets: Total balance of securities investment excluding securities of affiliates. The same evaluation basis used for settlement terms (interim and final earnings) and end-of-quarter terms other than the settlement terms.
• Number of employees: Total number of workers employed by an enterprise under one of the following labor contracts: 1) unspecified employment period; 2) specified employment period of one month or longer; 3) daily employment or specified employment period of less than one month but more than eighteen days in each of the previous two months. Workers affiliated with temporary-employment services are not included. Others include: a) among executives, those working full-time, such as chief managers and plant managers, and receiving monthly payments like that of general wage and salary workers other than directors' remuneration; b) among family workers of employers, those working full-time at the establishment and receiving monthly payments like that of other wage and salary workers.
• Part-time workers: Of the workers in the previous item, the total number of workers whose contracted daily or weekly labor hours are less than those of regular employees.

For the following items, responding enterprises are asked to choose one alternative among three as the best descriptor of prevailing conditions (changes from at the time of the survey to three months hence), excluding seasonal factors.

• Interest-bearing debt outstanding: Total balance of borrowings, discounted bills, commercial paper, and corporate bonds.
  [1) Increase. 2) Unchanged. 3) Decrease.]
• Level of liquidity: Total balance of cash, deposits and marketable securities.
  [1) Rise. 2) Unchanged. 3) Fall.]
• Number of employees: [1) Increase. 2) Unchanged. 3) Decrease.]

Annual projections

For the following items, responding enterprises are asked to provide semiannual and annual results and forecasts. Figures are based on Japanese financial statement preparation rules and represent the non-consolidated accounts of the responding enterprise.

a) Items in every survey

• Sales: Although there may be differences among enterprises in whether discounts on sales and returns are deducted from gross sales, responding enterprises are asked to report in a consistent manner.
• Domestic sales: Reported only by the wholesale industry.
• Exports: Except wholesale industries, both direct exports and exports via trading houses are included.
• Exchange rates for exports (Yen per dollar): For actual results, the average rate during the period, rounded to the nearest yen unit; for forecasts, the expected rate assumed in the individual export plans.
• Current profits
• Fixed investment: The amount of tangible fixed assets newly listed during the term, prior to exclusion and depreciation, includes construction suspense accounts, but excludes amount transferred from construction suspense accounts to construction accounts. Note that this item includes new purchases of land.
• Software investment: The amount of intangible fixed assets newly listed during the term, prior to exclusion and depreciation, includes software suspense accounts, but excludes amount transferred from software suspense accounts to software accounts.

b) Items in every survey (as for the March survey, forecasts of the next fiscal year are omitted).

• Material costs: Among manufacturing costs, the cost of raw materials, purchased parts, fuel, and processing fees for subcontractors.
• Personnel expenses: Total of executives' and workers' salaries and allowances, and other labor expenses such as welfare expenses as well as allocations to the reserves for retirement pay and bonuses. Excludes payments to temporary staffing agencies.
• Depreciation expenses: Total depreciation expenses for fixed assets and deferred assets.
• Operating profits
• Financial income: Among non-operating profits, total of interest and discounts received, interest on securities, and dividends received. Excludes valuation profit and profit on securities sold, and exchange profit.
• Financial expenses: Among non-operating profits, total of interest and discounts paid, interest on corporate bonds, amortization of bond premiums and bond issuing expenses. Excludes valuation profit and profit on securities sold, and exchange profit.

c) Items surveyed twice a year in June and December (only annual figures surveyed)

In principle, these items cover business plans for the operations of consolidated affiliates, under the effective control standard, located in foreign countries. There may be some cases in which non-consolidated subsidiaries are also included.

• Overseas production: For manufacturing enterprises, total productions by foreign affiliates that are engaged in production activities. For non-manufacturing enterprises, total supply by overseas original equipment manufacturers with which there are no capital ties.
• Overseas investment: The amount of tangible fixed assets newly listed during the period by foreign affiliates, prior to exclusion and depreciation, includes construction suspense accounts, but excludes amount transferred from construction suspense accounts to construction accounts.

d) Item surveyed only in December

• Number of new graduates hired: The number of new graduates the responding enterprise plans to hire in the next fiscal year as of the December survey and the number it hired during the current fiscal year.

D. Coverage

The sample enterprises for the All Enterprises Tankan survey are selected from a"population" of all private enterprises in Japan employing fifty or more persons (or twenty or more persons in the wholesaling, retailing, services, and leasing industries). The required number of sample enterprises is different by industry and size classifications shown below.

Population:

Private enterprises employing fifty or more persons (or twenty or more persons in the wholesaling, retailing, services, and leasing industries) excluding financial and insurance industries listed in the "1996 Establishment and Enterprise Census of Japan" published by Management and Coordination Agency after the survey on October 1, 1996.

Sample:

Sample enterprises were reviewed in the March 1999 survey and will in principle be fixed until the next review. ¹ (See the end of this book for the number of the sample enterprises in this survey.)

Industry
classification:

Essentially following the medium-level classifications utilized in the Standard Industrial Classifications of Japan, manufacturing is divided into seventeen and non-manufacturing ten. ²

Size
classification:

In publishing the surveys, the enterprises are classified by size into"large,""medium" and"small" according to their number of employees, as shown in the table below. ³

E. Survey method

The answer sheet is delivered and collected by mail. Note that the All Enterprises Tankan survey is a registered survey in accordance with the Statistics Law (Law No. 18 of 1947), and confidential information about responding enterprises is protected under strict controls.

F. Calculations methods

• For quantitative data, the following formulae are used to deduce population estimates for any individual industrial and size classification.

Individual population estimate
= Simple aggregate / Number of responding enterprises
* Number of population enterprises

All-industry or all-size population estimate
= Sum of the individual population estimates by industry or size

Revision rates of the results between the current survey and the previous survey are calculated by using both survey population estimates, which implies that there may be differences in the number of responding enterprises in the two surveys.

• For judgement questions, the percentage share of the raw number of responding enterprises for each of the three choices is calculated. The diffusion index (DI) is calculated as following:

  DI = Percentage share of enterprises responding for Choice 1
  minus Percentage share of enterprises responding for Choice 3

• The response rates represent the percentage of enterprises responding to the questions of Business conditions. We also calculate number of reporting companies for quantitative items for reference.
• As for reference series, responses are also tabulated regionally according to the following regional categories. (Bank of Japan branch offices also calculates and publishes results for enterprises including the outlying business offices within their jurisdiction.)
  • Hokkaido: Hokkaido
  • Tohoku: Aomori, Iwate, Miyagi, Akita, Yamagata, and Fukushima Prefectures
  • Kanto: Ibaraki, Tochigi, Gunma, Saitama, Chiba, Tokyo, and Kanagawa Prefectures
  • Hokuriku: Niigata, Toyama, Ishikawa, and Fukui Prefectures
  • Chubu: Yamanashi, Nagano, Shizuoka, Aichi, and Mie Prefectures
  • Kinki: Shiga, Kyoto, Osaka, Hyogo, Nara, and Wakayama Prefectures
  • Chugoku: Tottori, Shimane, Okayama, Hiroshima, and Yamaguchi Prefectures
  • Shikoku: Tokushima, Kagawa, Ehime, and Kochi Prefectures
  • Kyushu/Okinawa: Fukuoka, Saga, Nagasaki, Kumamoto, Oita, Miyazaki, Kagoshima, and Okinawa Prefectures

(2) Principal Enterprises Tankan

A. Purpose of survey

The survey is conducted to provide an accurate picture of long-term trends of principal enterprises in Japan.

B. Frequency of survey

The survey is conducted quarterly in March, June, September, and December (at the same time as the All Enterprises Tankan).

C. Contents of survey

Same as the All Enterprises Tankan.

D. Coverage

Enterprises deemed to generally reflect trends in their industries are principally selected from among stock exchange listed companies, excluding the finance and insurance industries, with at least one billion Yen in capital. (However, the survey may contain companies with less than one billion Yen in capital or unlisted companies if they are deemed sufficiently influential.) There are in principle no substitutions in the sample.
All of the enterprises in the Principal Enterprises Tankan are also selected as the sample of the All Enterprises Tankan.
Like the All Enterprises Tankan, industrial categories essentially follow the medium-level classifications utilized in the Standard Industrial Classifications of Japan, but lumber and wood products are omitted to arrive at sixteen manufacturing categories, while electric power and gas are separated to arrive at eleven non-manufacturing categories.

E. Survey method

The answer sheet is delivered and collected by mail. Note that the Principal Enterprises Tankan survey is a registered survey in accordance with the Statistics Law (Law No. 18 of 1947), and confidential information about responding enterprises is protected under strict controls.

F. Calculation methods

• For quantitative data, simple aggregates are used. ( on the"Ratio related to Corporate Finance etc.", seasonally adjusted data that uses the Census Bureau II-X-11 method are used to calculate figures and retroactive revisions following the June survey.)
  Revision rates of results in the current survey and the previous survey are only calculated for enterprises responding to both surveys.
• For judgement questions, the percentage share of the raw number of responding enterprises for each of the three choices is calculated. The diffusion index (DI) is calculated by the same method as in the All Enterprises Tankan.)

(3) Fixed Investment of Financial Institution

A. Purpose of survey

The survey of the fixed investment plans of principal financial institutions is conducted to supplement and enhance the Principal Enterprises Tankan in Japan.

B. Frequency of survey

The survey is conducted quarterly in March, June, September, and December (at the same time as the All Enterprises Tankan and Principal-Enterprises Tankan).

C. Contents of survey

The survey asks responding financial institutions for semiannual and annual results and plans.

• Fixed investment: The amount of tangible fixed assets newly listed during the term, prior to exclusion and depreciation, includes construction suspense accounts, but excludes amount transferred from construction suspense accounts to construction accounts. Note that this item includes new purchases of land and projects listed as assets of subsidiaries and affiliates when the asset is leased by the responding financial institution.
• Software investment: The amount of intangible fixed assets newly listed during the term, prior to exclusion and depreciation, includes software suspense accounts, but excludes amount transferred from software suspense accounts to software accounts. Note that this item includes projects listed as assets of subsidiaries and affiliates when the asset is leased by the responding financial institution.
• Investment for computerizing: Computer center establishment and expansion costs, of which land purchasing expenses, hardware costs (purchasing or leasing), and cost of fully-subcontracted development. Surveyed semiannually in June and December.

D. Coverage

Banks (city banks, long-term credit banks, trust banks, regional banks, members of the Second Regional Banks Association), major securities companies, and insurance companies. There has been no change in the responding financial institutions since the survey began in 1989.

E. Survey method

The answer sheet is delivered and collected by mail. Note that the survey of the fixed investment of financial institutions is a part of the Principal Enterprises Tankan registered in accordance with the Statistics Law (Law No. 18 of 1947), and confidential information about responding financial institutions is protected under strict controls.

F. Calculation methods

Simple aggregates are calculated for each sector.

1. In light of the periodical new results of the "Establishment and Enterprise Census of Japan", the sample enterprises for the All Enterprises Tankan are reviewed almost every five years. In the review, we select eligible enterprises at random for those industry or size classifications for which it is inadequate in the sense of statistical precision with the current sample. (Enterprises that are no longer eligible for inclusion in the population are excluded.)
   In reviewing the sample enterprises, we select enterprises in the"large," "medium-sized," and"small" categories so that the standard deviation of estimated sales for the population is within 3% for manufacturing and 5% for non-manufacturing.
2. In manufacturing, the following are classified as"basic materials industries:" textiles, lumber and wood products, pulp and paper, chemicals, petroleum and coal products, iron and steel, and nonferrous metals; and the following are classified as"processing industries:" food and beverages, processed metals, industrial machinery, electrical machinery, transportation machinery, precision machinery, and other manufacturing.
3. In publication, we classify enterprises as "large,""medium-sized," or"small," but in estimating the population, we utilize more detailed classifications as shown below in order to improve the precision of the statistics.