In: Finance
What are some qualitative factors that analysts should consider when evaluating a company's likely future financial performance?
Financial performance of a business is the use of resources to get the maximum returns and revenues.
Qualitative factors are as below:
Production facilities: These are land, labor, material, etc. Making a good reputation of today makes the business for tomorrow. An analyst has to look such relationships. Timely payments to suppliers, giving discounts, etc improve relationships; which increases future performance.
Brand loyalty: This is customers’ satisfaction on product. If such loyalty is created in the market, product demand would not fall in future. An analyst should observe how much brand loyalty is established by the business. If it is very high today, it could be anticipated that future performance should be good.
Capacity utilization: Future performance depends on capacity. Few capacities are machine oriented and some others are labor oriented. Today’s unused capacity could be utilized in future for improving performance.