Non-Financial indicators

Which of the following is a non-financial indicator?

There are some financial indicators. But besides that, there are some important Non-Financial indicators which are the following. Which must be considered before the investment.

Types of business of company
Management of company
Market Share of the company
Product Range
Diversification of products
Expansion Policy
Distribution Policy
Foreign Collaboration
Availability of inputs
Research and development policy
Government policy
Purchase time
New Millennium Trends

(1). Types of Business Policy:- The Investors should know that the company is well known in its business. Investors also should know about the industry in which the company is operating. Because they would like to know growth prospects. Whether its products will remain in continued demand For Example:- Consumer non durable goods, digital products and essential things of daily life. The future outlook of the company can be expected by the investors for growth prospects to future gain of investment. Non-Financial indicators

(2) Management of company:- Whether management of company has insufficient finance, however they can meet their daily needs if their management performs efficiently. Because performance of management plays a crucial role in the growth of any business. So investors should consider management, as how it is playing to growth. What objectives they have to achieve for business. Non-Financial indicators

(3). Market Share of the company:- Investors should also consider the market share of the company. Because if a company has a large share of the market then the investment of investors will be profitable. Otherwise, reverse it. So market share is a non-financial indicator of investment. Which represents the potential growth of business in the economy.

(4). Product Range:- An progressive companies remain in competition by launching new products. By doing such they can secure their existing products also. So before the investment, investors have to analyse the product range. Which helps to profit the organisation.

(5). Diversification of Products:- In modern days, it is required for every company to diversify in various products. Because an appropriate diversification may minimise the loss and also boost the return. Example:- ITC company has diversified their products in various fields as cosmetics, cold-drinks, biscuit and shampoos etc. It will balance the loss. Thus, diversified companies can provide sufficient return to the investors on their investments. Non-Financial indicators

(6). Expansion Policy:- Expansion policy may be considered before the investment by investors. Because if a company expands its business beyond its local location then its business will be returnable. If a company services in a limited area then it can\’t earn sufficient profit. So to earn more every company needs to expand its business. Thus, investors have to consider the expansion policy of the company. Which can be profitable for the investors. Non-Financial Indicator

(7). Distribution Policy:- Investors should know the distribution policy of the company. If the company has a stable and consistent policy of return distribution to the investors. Then it will be a wise option for the customers to invest in such a company. But it can be possible with good profit margins. Then the company can distribute a reasonable amount of its profits as dividend, interest and bonuses etc. Because some companies distribute their return on a quarterly basis, six month basis and yearly basis. However, it depends upon the profit quantity of the company. Non-Financial indicator

(8). Foreign Collaboration:- Sometimes a company operates in a domestic way so then it needs new technology. Which can be possible by foreign collaboration. If a company has entered into technical collaboration with foreign company. Then it can be profitable for the business of company. Because collaboration helps the company in technical issues. So before the investment investors must have to know whether the company has collaboration with the foreign company.

(9). Availability of raw materials:- Investors must also assess the raw material position of the company. Because if any company has not a sound policy of raw material or insufficient raw material. Then such obstacles may raise the problem of declining sales of a company. Due to which the profit of the company will decline. The result of which will be the influence of the investors. Which are to be distributed to the investors. Non-Financial indicator

(10). Research and Development:- The company who spends their substantial part of profit on the research and development. It is done for the purpose to upgrade their existing products, introduce new products, import and export technology machinery. Such companies have bright future prospects. Thus, before the investment investors have to analysis all these points while he is considering non-financial indicators. Non-Financial indicator

(11). Government Policy:- There are some regulations and policies which are created by the government for business organisations. These regulations may be strict or not. Which influences the earnings of the company. Thus, investors have to analyse government policy before the investment. These Government policies are different from business to business.

(12). Purchase Time:- Purchase time of investment must be determined before the investment decision. It may be short and long. However, it depends upon the work of the company. If a company has regular income then investors can invest for the long term. Because some investors are interested in buying long term investments, whereas some are interested in buying short term investments. Non-Financial indicator

(13). New Millennium Trends:- There are some trending industries in which investment can be profitable by the investors. Example:- Digital Industry, Engineering industry, Robots industry, Informatics, multimedia and E-commerce industry. Which will remain in trending. Whose profit will be increased in the future. Because they provide services that are trending. Non-Financial indicator

Conclusion:- We know that financial indicators lead to the growth of a company. Because finance is a blood which helps to run the body as business. But there are some Non-Financial indicators which may create obstacles in the way of profits of companies. Due to which ultimately the effect falls on the return of the investment of investors. So these non-financial indicators are considered before the investment by the investors.

Note:- You can also ask important questions about portfolio management. Which determined the avenues of investment. Through which investors can invest. Non-Financial indicator

Avenues of Investment

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