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Which qualitative aspects to consider while analysing a Company?

Team MoneyWorks4Me May 20,2009 211 2 min read

After reading this book by Philip A. Fisher - Common Stocks And Uncommon Profits I came across some of the important qualitative aspects that need to be kept in mind while analysing a company. Lets see what some of them are:

1) Marketing & Advertising Efforts:

The marketing team of a company should always be aware & ready to adapt to the changing desires of customers.The marketing & advertising activities should be targeted towards the right market. The efforts should bring out worthwhile results.

Also, the company should supply what is desired today & not what was desired earlier. For example- if a company's marketing efforts are being wasted in selling & producing better typewriters rather than shifting to the new technology of computers, it is a waste.

2) Research & Development Activities and Technical-Know-How:

Indian companies were not into Research & Development activities till some time back, but now, industries like Pharma & Automobiles have put their step forward. For example, Tata Motors has 2 research centres at Jamshedpur & Pune where it carries out all its research & testing activities.The important point that has to be taken care of here is that the research/ technical know how activites ahould have a positive outcome either in way of an inovative product/service or a profitable return on the amount of time & expense spent on the activities.

Now, where do you find the R & D expenses of a company? R & D expenses are capitalized and hence one can find this under the assets heading in a balance sheet of a company.

3) A Strong & Efficient Management Team:

A company should be led by a strong & able leader, along with a well coordinated team of members. All the employees ( even the ones at the lower level) should be involved and should be aware of all the decisions & happenings in the organisation. In this way the employees at the lower levels can be attracted & further trained for larger responsibilities. All the team members should have an entrepreneurial spirit inbuilt. This is a slightly difficult aspect to folloe, but one can always read the annual reports & other news & press releases & get an idea about the management.

Also track the company's objectives & policies. Are these objecives personally rooted or for the shareholders? Are they formed keeing a short term or long term view in mind? The company's whose objectives are for the benefitof the shareholders & keep the long term in perspective. A company that only announces its short term objectives is just trying to show a rosy picture for the moment.

4) Law of Leadership:

You should always try to track a company which is the leader of the product/service in the market. A company that gets in first with a product/service, tends to be a leader always & holds a higher market share. Such a company always has a higher profit margin.

The next company that comes into competition will always hold a lower market share. Hence, track companies following this leadership attribute.

5) Adapt To Change:

Companies should realize that the current market will not remain the same & it is changing at a very fast pace. It has to understand & adapt to this change in all areas which could be even the processes they follow or the products they launch. They need to realize that just because a product/process/technology has worked in the past, it is not necessar it will work again.

These are few of the qualitative aspects to be considered.

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Team MoneyWorks4Me

A team of business leaders, equity research analysts & investment counsellors. Started in 2008; experienced in equity research, financial planning and portfolio management. Passionate about providing institutional quality research and advice to Retail Investors in a simple easy-to-understand-and-act manner.

SEBI Registered: Investment Adviser - INA000013323

Name of the IA registered with SEBI:	The Alchemists Ark Pvt. Ltd.
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Trade/Brand Name of IA:	MoneyWorks4Me Investment Advisers
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SEBI Registration Number:	INA000013323 Validity - May 16, 2019 - Perpetual
Registration:	Non-Individual
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Address:	B-101, Signet Corner Building, Balewadi Phata, Baner, Pune, Maharashtra 411045
Compliance officer Details:	Name: Shrikant Jagtap Email: shrikant.jagtap@moneyworks4me.com Telephone: +919860359463 Address: Same as IA
Grievance Officer Details:	Name: Mukta Vaze Email: mukta.vaze@moneyworks4me.com Telephone: +91 98609 19463 Address: Same as IA
Principal Officer Details:	Name: Atharva Bhide Email: atharva.bhide@moneyworks4me.com Telephone: +91 91758 99463 Address: Same as IA
Standard Warning:	Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Disclaimer:	Registration granted by SEBI, enlistment with exchange and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

Warning: Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

Disclaimer: Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provides any assurance of returns to investors.

Compliance Officer:

Name: Shrikant Jagtap

Email: shrikant.jagtap@moneyworks4me.com

Mobile No: +91 97638 00745

Grievance Officer:

Name: Mukta Vaze

Email: mukta.vaze@moneyworks4me.com

Mobile No:+91 98609 19463

Principal Officer:

Name: Atharva Bhide

Email: atharva.bhide@moneyworks4me.com

Mobile No:+91 91758 99463

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Plot No. C 4-A , G Block, Near Bank of India, Bandra Kurla Complex, Bandra East, Mumbai, Maharashtra 400051

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