Explaining quantitative analysis
Quantitative analysis is a business or financial analysis technique that aims at understanding behavior through the use of complex mathematical and statistical modeling, measurement, and research. The main aim of assigning a numerical value to variables by the quantitative analysts is to reflect reality mathematically. Quantitative analysis can be performed for various reasons like performance evaluation, measurement, or evaluating a financial instrument. Besides, it is also helpful in predicting real world events like changes in the price of a share.
Explained in broad terms by Investopedia, quantitative analysis is simply a way of evaluating things. Instance of quantitative analysis include everything from simple financial ratios, like earning per share, to something as intricate as discounted cash flow, or option pricing. In spite of being a powerful tool for investment evaluation, quantitative analysis hardly ever depicts a complete story without the help of its converse (qualitative analysis).
Advantages of Quantitative Analysis
The advantages of quantitative analysis are based mainly on the high value of having easily measured numerical data collected from large populations. This type of analysis uses simple and cost-effective data collection formats to gather information that can show an insightful influence on the future decisions of an organization. This quantifiable info is essential for manufacturers, for example, as solid and reliable figures translate into profitable production. Moreover, quantitative analysis can come up as a reliable determinant of success in business and other fields.
In addition to the aforesaid advantages, another advantage of quantitative analysis is provision for replicated and generalized data. Replicated and generalized consumer study can be repeated at regular intervals to keep data up to date and accurate. Also, quantitative analysis can be verified conveniently by employees with little analysis or research background. Te evaluation of how well a product or service sells over weeks, months, or years, similar testing tools and procedures are used repeatedly by the quantitative analysis.
Moreover, this analysis technique gives timely and continuous data collection that can e used for various products and services. Above all, quantitative research formats into statistical data that can be interpreted easily thus providing a global marketing appeal.
- Debt ratios
- Liquidity ratios
- Profitability ratios
- Asset management ratios
- Cash Flow Indicator Ratios
- Market value ratios
- Financial analysis
- Business Terms
- Financial education
- International Financial Reporting Standards (EU)
- IFRS Interpretations (EU)
- Financial software