• We make a qualitative decision: Is it a good company?
• Is it profitable? Has it paid dividends regularly? Is the stock rising? Does it have a lot of debt? Is the P/E ratio high or low? In other words, is the company a good value?
• Is the company healthy? Is it in good strong hands? Is the management competent? Is there a large employee turnover? Are salaries reasonable?
• Is the company likely to be competitive in the future?
• Add to these concerns some new questions, such as: Does the CEO have a sensible exit package? Are there any accounting irregularities?
• Is it profitable? Has it paid dividends regularly? Is the stock rising? Does it have a lot of debt? Is the P/E ratio high or low? In other words, is the company a good value?
• Is the company healthy? Is it in good strong hands? Is the management competent? Is there a large employee turnover? Are salaries reasonable?
• Is the company likely to be competitive in the future?
• Add to these concerns some new questions, such as: Does the CEO have a sensible exit package? Are there any accounting irregularities?
All of these questions and answers are important. They try to reach the vital areas that determine whether a company is sound and likely to remain that way. The problem is whether you can get answers to these questions, and whether those answers are reliable. Even when they appear to be answered, what is your level of confidence in a decision based on so many complex issues?
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