Qualitative vs. Quantitative

in qualitative •  7 years ago 

Qualitative: analysis means looking at the intangibles. The factors about a company that are not purely numbers driven can be just as important as crunching the numbers.
Quantitative analysis means looking at and the actual numbers. Looking at different financial metrics and ratios is fundamental to the analysis of any company being looked at.

A comprehensive analysis of a company should include looking at both the qualitative and quantitative factors that would impact decision making. Common quantitative factors include calculating different ratios (debt/equity, current ratio) and considering different financial metrics (net income, net assets).

Qualitative: analysis can be far more subjective and really depends on the company that is being looked at, and the purpose of the analysis overall. Perception of management effectiveness is important, do you think they can run the company effectively and take advantage of opportunities? Customer and supplier relationships are important also, you can't really quantify a company's leverage with suppliers but you would want to know about something like this. Qualitative assessments require a degree of professional judgement in terms of what's relevant and what should be discussed or looked into.

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