Management analysis is indeed one of the most difficult part of company research. It comes only with experience, and even experts go wrong many a times. For starters, go through the article given below.
How to do Management Analysis of Companies – Dr Vijay Malik
In general, to assess management quality you need to look at management’s actions (ACTIONS – not words) over a long period of time, and arrive at a judgement. Look at what the management has done, and not done over the years.
A simple way is to take the latest Annual Report and compare it with the Annual Report 10 years ago. Compare parameters such as number of products, product lines, number of plants, manufacturing capacity, dealer / distributor network, geographical reach etc. If the management is dynamic and competent, you should see good growth in these things over the years. Also look at what the management has NOT DONE – absence of frequent equity dilutions, unrelated diversifications, debt write offs, large M & As etc. are all positives and their presence is a negative (or risk).
Finally, you can never be sure about what the management will do next. Remember you are only trying to reduce the chances of a mistake and increase the odds of good decisions.
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