Qualitative factor of fundamental analysis

How to Perform a Qualitative Analysis

To start, identify a set of qualitative factors and then decide which of these factors add value to the company and which of these factors decrease value. Then determine their relative importance. The qualities you analyze can be categorized as having a positive effect, negative effect, or minimal effect.

If, when looking at the company’s numbers, you saw good reason to buy the company, but subsequently found many negative qualities, you may want to think twice about buying. Negative qualities might include potential litigation, poor research and development prospects, a reputation for poor customer service, or a board full of insiders. The conclusions of your qualitative analysis either reconfirms or raises questions about the findings from your quantitative analysis.

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