Question

Some benefits and costs cannot be quantified. What kinds of benefits and costs elude quantification, and how can these be factored into an investment decision?

Answer 1

Some benefits and cost cannot be quantified and these benefits and cost are very important in order to discount for making any investment decision to the company because all the benefits which are accruing to the business are not easily quantifiable as they are mostly in terms of qualitative benefits so company when they are trying to gain additional benefits due to core competitiveness or Synergy benefits for Goodwill or business reputation along with the ability of the management and competitiveness of the business and these can never be quantifiable whereas loss of reputation is also not quantifiable in negative side for various business but they will have to be discounted while making an investment decisions in the company.

Investor will be trying to provide adjustment of these qualitative factors while assessment of investments because these factors are not reflecting in valuations but investors will be trying to consider them when he is making an investment decision like he will have to only select companies who have a better business reputation and we will have to avoid the company which are having a risk of manipulation so he will only filtering with those companies and quantifying the ratios of those companies which are according to his qualitative standard so these qualitative factors are to be discounted before making any investment decision as it will help him in order to maximize the rate of return.