What is a qualitative statement?
Unlike more common quantitative methods, the financial qualitative statement moves from the hard number to the description of what these figures mean in the real world. In a quantitative statement, the report may provide accurate annual income of a company with trends analysis over the past few years. A qualitative statement would give income with a discussion of circumstances that caused rise and falls and provided a comparison to show how the company in relation to other companies in the same area. The basis of qualitative information is trying to place everything in context and provide a wider area of understanding. If the company has to make an important decision, most managers will be very lucky through the pile of tables. In order to provide the required information clearly and quickly a qualitative report will focus on important areas without being extremely full of data.
Most qualitative statements focus on four key areas: relevance, reliability, readability and timeliness. Relevant messageIt will only contain information directly related to the purpose of the statement. Although knowing certain facts may be interesting for the reader, unless it is directly associated with the matter, it is not in the report. This simplifies and shortens the command.
Reliability is a method used in a qualitative statement that provides the ability to directly compare more disconnected entities. In principle, this means that the statement uses a set of comparative points between the company and its competitors, which is exactly the same in each company. For example, if a statement discusses the profit in March for one company, all other Comparisons will be against March data in other companies.The characteristic feature of a normal qualitative statement is readability. These documents are given up by common hard numbers and analysis of trends in favor of a more narrative document. This means that even if there are still charts and charts,Most information is listed in the text. The text is written in such a way that a person who does not know with finances and accounting can still understand the flow of the document.
The latest common feature of a qualitative statement is timeliness. The document deals with the information that is current and relevant to the statement. If the company is considering launching a new product line, the document will not have reports of trends analysis for three years before. These documents are made to allow a quick decision based on current information, and older data will quickly become too outdated.