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what is qualitative analysis | in business and management qualitative analysis uses subjective judgment to analyze a company s value or prospects based on non quantifiable information such as management expertise industry cycles strength of research and development and labor relations qualitative analysis contrasts with quantitative analysis which focuses on numbers found in reports such as balance sheets the two techniques however will often be used together to examine a company s operations and evaluate its potential as an investment opportunity investopedia paige mclaughlinunderstanding qualitative analysisthe distinction between qualitative and quantitative approaches is similar to the difference between human and artificial intelligence quantitative analysis uses exact inputs such as profit margins debt ratios earnings multiples and the like these can be plugged into a computerized model to yield an exact result such as the fair value of a stock or a forecast for earnings growth of course for the time being a human has to write the program that crunches these numbers and that involves a fair degree of subjective judgment once they are programmed though computers can perform quantitative analysis in fractions of a second while it might take even the most gifted and highly trained humans minutes or hours qualitative analysis on the other hand deals with intangible inexact concerns that belong to the social and experiential realm rather than the mathematical one this approach depends on the kind of intelligence that machines currently lack since things like positive associations with a brand management trustworthiness customer satisfaction competitive advantage and cultural shifts are difficult arguably impossible to capture with numerical inputs many social scientists use qualitative analysis in their research and it is especially prominent among anthropologists and sociologists qualitative analysis may sound almost like listening to your gut and indeed many qualitative analysts would argue that gut feelings have their place in the process that does not mean however that it is not a rigorous approach indeed it can consume much more time and energy than quantitative analysis people are central to qualitative analysis an investor might start by getting to know a company s management including their educational and professional backgrounds one of the most important factors is their experience in the industry more abstractly do they have a record of hard work and prudent decision making or are they better at knowing or being related to the right people their reputations are also key do their colleagues and peers respect them their relationships with business partners are also worth exploring since these can have a direct impact on operations the way employees view the company and its management is important are they satisfied and motivated or do they resent their bosses the rate of employee turnover can indicate employees loyalty or lack thereof what does workplace culture say about the company overly hierarchical offices promote intrigue and competition and sap productive energy a sleepy unmotivated environment can mean employees are mainly concerned with punching the clock the ideal is a vibrant creative culture that attracts top talent qualitative datagathering data for qualitative analysis can sometimes be difficult fortune 500 ceos are not known for sitting down with retail investors for a chat or showing them around the corporate headquarters in part warren buffett can use qualitative analysis so effectively because people are willing to give him access to their time and information the rest of us have to sift through news reports and companies filings to get a sense of managers records strategies and philosophies the management discussion and analysis md a section of a company s 10 k filing and quarterly earnings conference calls provide a window into strategies and communication styles clear transparent communication and coherent strategies are useful buzzwords evasiveness and short termism not so much qualitative data can also be collected in a number of other ways including interviews panel groups ethnography participant observation archival work and document analysis qualitative data is often read carefully and coded thematically to identify themes patterns and trends qualitative analysis in the business contextcustomers are the only group more crucial to a company s success than management and employees since they are the source of its revenue ironically if a company places customers interests before shareholders it may be a better long term investment if feasible it s a good idea to try being a customer say you re considering investing in an airline that has reined in costs beat earnings estimates in three consecutive quarters and plans to buy back shares when you try to actually use the airline however you find the website bug ridden the customer service representatives cranky the extra fees petty and your fellow passengers resentful the negative experience tells you that the company has a lack of priority for its customers and to be careful making an investment in the airline a company s business model and competitive advantage are vital components of qualitative analysis what gives the firm an enduring leg up over its rivals has it invented a new technology that competitors will find hard to replicate or that has intellectual property protection does it have a unique approach to solving a problem for its customers is its brand globally recognized in a good way does its product have cultural resonance or an element of nostalgia will there still be a market for it in twenty years if you can plausibly imagine another company stepping in and doing what this one does just a little bit better then the barrier to entry may be too low why will an un established company be the one to create or disrupt its chosen market and why won t it then be replaced in turn example of qualitative analysis in businessthe idea behind quantitative analysis is to measure things the idea behind qualitative analysis is to understand them the latter requires a holistic view and a fact based overarching narrative context is key for example a ceo who dropped out of college would be a red flag in some cases but mark zuckerberg and steve jobs are exceptions silicon valley is for better or worse a different beast a look at mcdonald s corp s mcd financials a few years ago would have told you nothing about a looming backlash against cheap unhealthy food on the other hand a purely qualitative approach is vulnerable to distortion by blind spots and personal biases quantitative measures can act as a check on these tendencies qualitative analysis vs quantitative analysisqualitative analysis relies on thick description and deep understanding of the subject being researched obtained from in depth interviews observations and or close readings of text this type of research typically looks at case studies and can be used to understand local phenomena quantitative analysis instead relies on the statistical analyses of numerical data obtained from surveys experiments or administrative records from this inferences can be made and correlations between variables analyzed to understand more generalized phenomena | |
what are the steps in qualitative analysis | although the exact steps may vary most researchers and analysts undertaking qualitative analysis will follow these steps | |
what are the methods of qualitative analysis | qualitative research encompasses a wide range of techniques and methodologies among the most common include | |
what are some examples of qualitative data | qualitative data can take many forms common types include transcripts generated from one on one interviews free text responses on surveys narratives quotations text documents images or observations taken down in a notebook or research journal | |
where is qualitative analysis used | qualitative analysis can be applied to a wide range of research topics or practical settings it is best used if you are interested in understanding human behavior from an informant or participant perspective to get a better understanding of what is going on in the social context around you | |
what is quality control qc | quality control qc is a process through which a business seeks to ensure that product quality is maintained or improved quality control requires the company to create an environment where management and employees strive for perfection this is done by training personnel creating benchmarks for product quality and testing products to check for statistically significant variations a significant aspect of quality control is the establishment of well defined controls these controls help standardize both production and reactions to quality issues limiting room for error by specifying which production activities are to be completed by which personnel reduces the chance that employees will be involved in tasks for which they do not have adequate training ryan oakley investopediaunderstanding quality control qc quality control involves testing units and determining if they are within the specifications for the final product the purpose of the testing is to determine any need for corrective actions in the manufacturing process good quality control helps companies meet consumer demands for better products creating a product is costly time consuming and can be unsafe without controls in place additionally if a company sends defective products out for purchase it could be held liable for injuries or issues that arise from using its products quality control inspectors ensure that defective or unsafe products are identified and the causes are corrected quality testing is generally completed in each step of a manufacturing or business process employees often begin by testing raw materials pulling samples from the manufacturing line and testing the finished product testing at the various stages of manufacturing helps identify where a production problem is occurring and the remedial steps it requires to prevent it in the future in a non manufacturing business quality testing can involve customer service evaluations questionnaires surveys inspections or audits a business can use any process or method to verify that its end product or service meets the customer s needs and is safe and legal the quality control used in a business is highly dependent on the product or industry for example in food and drug manufacturing quality control includes ensuring the product does not make a consumer sick so the company performs chemical and microbiological testing of samples from the production line in aircraft manufacturing quality control and assurance is of the utmost importance manufacturers are required to document track inspect and reinspect all items and phases of a build to build evidence that everything is completed to very strict standards in automobile manufacturing quality control focuses on parts meeting specifications and tolerances qc ensures engines drive trains and other mechanical parts operate smoothly efficiently safely and as designed in electronics quality testing might involve using meters that measure the flow of electricity and stress testing quality control vs quality assurancequality control and quality assurance are terms often used to define the same thing but there are distinct differences quality control focuses on quality requirements such as ensuring a part meets specifications quality assurance refers to the sum of all actions and processes needed to demonstrate that quality requirements are fulfilled 1 | |
what this difference means for quality professionals is that as you move through a quality control career you might transition from quality control to quality assurance quality control is part of quality assurance which consists of programs and departments that assure upper level management customers and government inspectors that products meet all quality requirements and safety standards | quality control methodsthere are several methods quality control uses to communicate and track inspections and issues for instance a quality control chart is a graphic that depicts whether sampled products or processes are meeting their intended specifications and if not the degree by which they vary from those specifications | |
when one chart analyzes a specific product attribute it is called a univariate chart a chart that measures variances in several product attributes is called a multivariate chart tracking variances allows businesses to see how many defects per production unit they produce and what types of defects are occurring here are a few examples of some methods used | randomly selected products are tested for the given attributes the chart is tracking a common form of a quality control chart is the x bar chart where the y axis on the graph tracks the degree to which the variance of the tested attribute is acceptable the x axis tracks the samples tested analyzing the variance pattern on this chart helps you determine if defects are occurring randomly or systematically the taguchi method of quality control is another approach that emphasizes the roles of research and development product design and product development in reducing the occurrence of defects and failures in products the taguchi method considers design more important than the manufacturing process in quality control and tries to eliminate variances in production before they can occur this 100 inspection method is a quality control process involving looking at and assessing all product parts this type of quality control is done to rule out flaws in products this method is often used to evaluate valuable metals the 100 inspection method calls for data about the manufacturing process and software to analyze inventory the challenge of using this method is that looking at every single item used to build a product is expensive and could destabilize or render the product unusable for example if you use this method to examine organic strawberries you risk damaging the berries rendering them unsellable quality control methods help standardize production and reactions to quality issues in various industries from food production to automobile manufacturing quality control careersquality control can be a rewarding career if you enjoy working with people communicating presenting results and working to make products better and safer to become a quality control inspector you ll need depending on the industry 2other qualities that are necessary for quality control professionals are the route to a career in quality control and assurance varies by industry so there may be differences however you ll generally need several years of experience in your industry typically you begin by being hired as a quality assurance or control associate after meeting educational and work experience requirements once you gain work experience as a quality specialist or associate you may move into a senior specialist position and begin managing teams of quality control specialists you may attend professional development courses sponsored by your employer or be required to gain certifications such as six sigma 3 you might also need to earn a professional designation such as certified quality inspector 4moving up the career path you have more options you may be able to choose from or be selected to be a these positions can lead up to upper level management or executive levels within quality control the average pay for quality control professionals differs by industry experience and position pay increases as you gain more experience and move into management positions as of may 2023 the bureau of labor statistics reports average salaries as 5 | |
what does quality control mean | quality control means how a company measures product quality and improves it if need be quality control can be done in many ways from testing products reviewing manufacturing processes and creating benchmarks this is all done to monitor significant variations in a product | |
what are the 4 types of quality control | there are several methods of quality control these include an x bar chart six sigma 100 inspection mode and the taguchi method | |
why is quality control important | quality control ensures that defective goods do not go out to the public companies that have quality control methods in place often have employees who pay close attention to their work in food and drug manufacturing quality control prevents products that make customers sick and in manufacturing quality control can ensure that accidents don t happen when people use a product | |
what are 3 examples of quality control | three examples of quality control could be in the food industry overseeing the ingredient specifications reviewing supplier lists and ensuring the facility where the food product is made is sanitary the bottom linehaving quality control in place within a business helps ensure product quality and the overall success of a business the quality control environment influences employees attitudes about the workplace and creates a sense of ownership of the products and company quality control can be done in various ways from training personnel to creating data driven tools to test products and set standards quality control methods help create a safe work environment and products that are safe to use and meet customers needs additionally it is a rewarding career for someone who enjoys investigating issues and improving outcomes | |
what is a quality control chart | a quality control chart is a graphic that depicts whether sampled products or processes are meeting their intended specifications if not the chart will show the degree by which they vary from specifications a quality control chart that analyzes a specific attribute of a product is called a univariate chart while a chart measuring variances in several product attributes is called a multivariate chart randomly selected products are tested for the given attribute s the chart is tracking understanding quality control chartsquality control qc is a set of processes through which a business ensures that product quality is maintained or improved quality control requires the business to create an environment in which both management and employees strive for perfection this is done by training personnel creating benchmarks for product quality and testing products to check for statistically significant variations a major aspect of quality control is the establishment of well defined controls these controls help standardize both production and reactions to quality issues limiting room for error by specifying which production activities are to be completed by which personnel reduces the chance that employees will be involved in tasks for which they do not have adequate training quality control charts are a type of control often used by engineers to assess the performance of a firm s processes or finished products if issues are detected they can easily be compared to their location on the chart for debugging or error control in other words it provides a heuristic blueprint for maintaining quality control a common form of the quality control chart is the x bar denoted as x chart where the y axis on the chart tracks the degree to which the variance of the tested attribute is acceptable the x axis tracks the samples tested analyzing the pattern of variance depicted by a quality control chart can help determine if defects are occurring randomly or systematically the r range chart is a quality control chart used to monitor the variation of a process based on small samples taken at specific times a quality control chart can also be univariate or multivariate meaning that it can show whether a product or process deviates from one or from more than one desired result different types of quality control charts such as x bar charts s charts and np charts are used depending on the type of data that needs to be analyzed example of a quality control chartfor example bob wants to know if his widget press is creating widgets that are up to standard he decides to test the density of a random sampling of widgets to see if the press air injection system is working properly and mixing enough air into the widget batter an appropriately airy batch of widget batter will cause the finished widget to float in water bob creates an x bar chart to track the degree to which each randomly selected widget is buoyant | |
what is quality management | quality management is the act of overseeing all activities and tasks that must be accomplished to maintain a desired level of excellence this includes the determination of a quality policy creating and implementing quality planning and assurance and quality control and quality improvement it is also referred to as total quality management tqm in general quality management focuses on long term goals through the implementation of short term initiatives investopedia jessica olahunderstanding quality managementat its core tqm is a business philosophy that champions the idea that the long term success of a company comes from customer satisfaction and loyalty tqm requires that all stakeholders in a business work together to improve processes products services and the culture of the company itself while tqm seems like an intuitive process it came about as a revolutionary idea the 1920s saw the rise in reliance on statistics and statistical theory in business and the first ever known control chart was made in 1924 people began to build on theories of statistics and ended up collectively creating the method of statistical process control spc however it wasn t successfully implemented in a business setting until the 1950s 1it was during this time that japan was faced with a harsh industrial economic environment its citizens were thought to be largely illiterate and its products were known to be of low quality key businesses in japan saw these deficiencies and looked to make a change relying on pioneers in statistical thinking companies such as toyota integrated the idea of quality management and quality control into their production processes by the end of the 1960s japan completely flipped its narrative and became known as one of the most efficient export countries with some of the most admired products effective quality management resulted in better products that could be produced at a cheaper price real world example of quality managementthe most famous example of tqm is toyota s implementation of the kanban system a kanban is a physical signal that creates a chain reaction resulting in a specific action toyota used this idea to implement its just in time jit inventory process to make its assembly line more efficient the company decided to keep just enough inventory on hand to fill customer orders as they were generated therefore all parts of toyota s assembly line are assigned a physical card that has an associated inventory number right before a part is installed in a car the card is removed and moved up the supply chain effectively requesting another of the same part this allows the company to keep its inventory lean and not overstock unnecessary assets 2 | |
what is quality of life | quality of life is a highly subjective measure of happiness that is an essential component of many financial decisions factors that play a role in the quality of life vary according to personal preferences but often include financial security as well as job satisfaction family life social connections health and safety financial decisions often involve a tradeoff in which present quality of life is decreased to save money or earn more money for the future understanding quality of lifequality of life is strongly associated with financial factors beyond the basic necessities of food and shelter more money often means access to greater comfort freedom from many anxieties and an optimistic outlook for the future inevitably job satisfaction is a key component of quality of life for many of us it determines our degree of satisfaction with half of our waking hours add in the importance of a paycheck and it affects many other aspects of our lives if a job provides time to enjoy life but leaves the worker too tired injured stressed out or otherwise unable to enjoy their earnings it subtracts from quality of life today it is common to weigh both salary and quality of life when considering how good or bad a job is quality of life is also an issue when developing a personal savings plan in this case the tradeoff involves sacrificing current quality of life to improve future quality of life this may include postponing luxuries and leisure activities that improve our overall sense of well being quality of life factorscommuting to work is a good quality of life example it is often possible to save money on housing by living farther away from work the trade off is less time to spend with family or hobbies and more time sitting in traffic or waiting for a train cheaper housing areas also tend to be located farther from art culture and entertainment some people consider this tradeoff worthwhile while others choose to maximize quality of life by living closer to a vibrant city center some jobs expose employees to potential hazards such as harmful chemicals heavy machinery high risks or physical strain the possibility of harm that could lessen their enjoyment of life is weighed against earning a higher salary for doing an unpleasant job hours spent at the job versus free time can be another measure of the quality of life professionals may choose to take high paying jobs that regularly require extended or late work hours to earn the income they desire this may include prolonged business travel while such choices can increase income it limits the hours available to enjoy it quality of life depends on the individual but access to good healthcare clean and safe housing healthy food and a living wage are near universal factors countries with the best quality of lifenorway denmark finland switzerland and the netherlands consistently rank in the world s top 10 countries in terms of quality of life or standing of living according to a 2024 world population review analysis of recent results from three sources 1in fact the top 10 list from numbeo one of the sources included nine european nations oman was number seven 2safety health care economic factors and education were commonly used factors in the reports the united states did not appear in the top 10 list of any of the three sources which included the united nations human development index and u s news world report as well as numbeo | |
how to improve quality of life | if you feel your quality of life is lacking considering how you define a good quality of life is an excellent first step towards improvement while everyone s idea of a high quality life varies there are some universal markers these markers may include access to good healthcare loving relationships meaningful work or volunteerism leisure time for hobbies you enjoy good rest healthy food and the ability to perform an enjoyable form of exercise studies have found that practicing gratitude and meditation can improve your quality of life 34 experts recommend adequate sleep at least seven hours per night to improve the quality of life and better control mood and energy levels 5 | |
how governments can improve quality of life | governments can look to data collected from happiness economic studies and indices to find places to improve the population s quality of life one such index is the gross national happiness gnh index the latest version of the index based on a survey of 5 000 americans concludes that delaware residents have the highest life satisfaction while oregon residents are in last place 6there are many ways that a government can improve the quality of its citizens lives actions include funding good public schools offering affordable access to healthcare and supporting family friendly policies like paid leave to take care of sick family members or newborn or adopted children these policy movements help families thrive many of the governments in countries listed as having a high quality of life provide services and programs to their citizens to help them improve their lives these include access to living wage jobs affordable or free higher education better gun control laws and access to high quality and affordable healthcare 7the quality of life in the u s is lower than in many developed nations due to declines in personal safety high healthcare costs and uneven access to high quality public education 2 | |
what are the primary indicators of quality of life | some primary indicators of quality of life include sufficient income job satisfaction decent housing access to high quality education a reasonable life work balance rewarding personal relationships and access to cultural and leisure activities | |
how can we improve quality of life | work on improving your work life balance relationships home and health governments can improve the quality of life in their countries by offering affordable and accessible healthcare investing in education providing affordable housing offering family friendly policies and putting laws into place for workers to earn living wages | |
how is quality of life calculated | quality of life can be calculated in many ways one is from the world health organization who defines quality of life as an individual s perception of their position in life in the context of the culture and value systems in which they live and in relation to their goals expectations standards and concerns 8the bottom linequality of life is above all an individual calculation most of us however include good health good friends loving relationships and some degree of creature comforts in the factors they assess it may sound distasteful but the money we have and the ways we get it have a big role in many of the factors that make up quality of life | |
what is quality of earnings | a company s quality of earnings is revealed by dismissing any anomalies accounting tricks or one time events that may skew the real bottom line numbers on performance once these are removed the earnings that are derived from higher sales or lower costs can be seen clearly even factors external to the company can affect an evaluation of the quality of earnings for example during periods of high inflation quality of earnings is considered poor for many or most companies their sales figures are inflated too in general earnings that are calculated conservatively are considered more reliable than those calculated by aggressive accounting policies quality of earnings can be eroded by accounting practices that hide poor sales or increased business risk fortunately there are generally accepted accounting principles gaap the more closely a company sticks to those standards the higher its quality of earnings is likely to be several major financial scandals including enron and worldcom have been extreme examples of poor earnings quality that misled investors importance of quality of earningsone number that analysts like to track is net income it provides a point of reference for how well the company is doing from an earnings perspective if net income is higher than it was the previous quarter or year and if it beats analyst estimates it s a win for the company but how reliable are these earnings numbers due to the myriad of accounting conventions companies can manipulate earnings numbers up or down to serve their own needs some companies manipulate earnings downward to reduce the taxes they owe others find ways to artificially inflate earnings to make them look better to analysts and investors companies that manipulate their earnings are said to have poor or low earnings quality companies that do not manipulate their earnings have a high quality of earnings this is because as a company s quality of earnings improves its need to manipulate earnings to portray a certain financial state decreases however many companies with high earnings quality will still adjust their financial information to minimize their tax burden as noted above companies with high quality of earnings stick with the gaap standards the fundamental qualities of those standards are reliability and relevance that is analysis of quality of earningsthere are many ways to gauge the quality of earnings by studying a company s annual report analysts usually start at the top of the income statement and work their way down for instance companies that report high sales growth may also show high growth in credit sales analysts are wary of sales that are due only to loose credit terms changes in credit sales or accounts receivable can be found on the balance sheet and cash flow statement working down the income statement analysts then might look for variations between operating cash flow and net income a company that has a high net income but negative cash flows from operations is achieving those apparent earnings somewhere other than sales one time adjustments to net income also known as nonrecurring income or expenses are another red flag for example a company may decrease expenses in the current year by refinancing all of its debt into a future balloon payment this would lower debt expense and increase net income for the current year while pushing the repayment problem down the road naturally long term investors don t care for that move a company can manipulate popular earnings measures such as earnings per share eps and price to earnings p e ratio by buying back shares of its own stock which reduces the number of shares outstanding in this way a company with declining net income may be able to post eps growth | |
when earnings per share go up the price to earnings ratio goes down this should signal that the stock is undervalued it doesn t though if the company changed the number by simply repurchasing shares | it is particularly worrisome when a company takes on additional debt to finance stock repurchases companies might do this to artificially inflate the per share price of their stock by reducing the number of shares available for purchase on the open market thus giving the impression that the value of the stock has increased | |
which earnings calculation is considered more reliable | earnings that are calculated conservatively are considered more reliable than those calculated by aggressive accounting quality of earnings can erode when accounting practices hide poor sales or increase business risk | |
what does quality of earnings say about a company | companies that stick with generally accepted accounting principles gaap standards are said to have high quality of earnings companies that manipulate their earnings are said to have poor or low earnings quality | |
what are red flags in annual company reports | matters of concern to analysts in a company s annual report include the bottom linea company s real quality of earnings is revealed by spotting and removing any anomalies accounting tricks or one time events that may skew the real bottom line numbers on performance after they are removed the earnings that are derived from higher sales or lower costs can be seen clearly | |
what is quality spread differential qsd | quality spread differential qsd is used to calculate the difference between market interest rates that two parties potentially entering into an interest rate swap are able to achieve it is a measurement that companies can use to gauge counterparty risk in an interest rate swap understanding quality spread differential qsd qsd is a measure used by companies of different creditworthiness in interest rate swap analysis they use a qsd to gauge default risk when the qsd is positive the swap is considered to benefit both parties involved a quality spread provides a credit quality measure for both parties involved in an interest rate swap the quality differential is calculated by subtracting the contracted market rate by the rate available to the counter party on similar rate instruments the difference between the two quality spreads can be calculated as follows the fixed rate debt differential is typically larger than that of the floating rate debt bond investors can use the quality spread to decide whether higher yields are worth the extra risk interest rate swapsinterest rate swaps trade on institutional market exchanges or through direct agreements between counterparties they allow one entity to swap their credit risk with another using different types of credit instruments a typical interest rate swap will include a fixed rate and a floating rate a company that seeks to hedge against paying higher rates on its floating rate bonds in a rising rate environment would swap the floating rate debt for fixed rate debt the counterparty takes the opposite view of the market and believes rates will fall so it wants the floating rate debt to pay off its obligations and obtain a profit for example a bank may swap its floating rate bond debt currently at 6 for a fixed rate bond debt of 6 companies can match debt with varying maturity lengths depending on the swap contract length each company agrees to the swap using the instruments it has issued quality spread differential qsd examplehere s an example of how qsds work company a swapping its floating rate debt will receive a fixed rate company b swapping its fixed rate debt will receive a floating rate the qsd is usually not calculated based on the rates of the instruments used the creditworthiness of both companies is different if company a aaa rated uses a two year term floating rate debt at 6 and company b bbb rated uses a five year fixed rate debt at 6 then the qsd would need to be calculated based on the rates versus the market rates company a s 6 rate on the two year floating rate debt compares to a 7 rate obtained for company b on a two year floating rate debt so this quality spread is 1 for a five year fixed rate debt company a pays 4 where company b pays 6 so the quality spread is 2 the key is to use similar products in the quality spread calculation in order to compare rates of similar issues in the example above this would be 2 minus 1 resulting in a qsd of 1 remember a positive qsd indicates a swap is in the interest of both parties because there is a favorable default risk if the aaa rated company had a significantly higher floating rate premium to the lower credit quality company it would result in a negative qsd this would likely cause the higher rated company to seek a higher rated counterpart | |
what is a quant fund | a quant fund is an investment fund whose securities are chosen based on numerical data compiled through quantitative analysis these funds are considered non traditional and passive 1 they are built with customized models using software programs to determine investments proponents of quant funds believe that choosing investments using inputs and computer programs helps fund companies cut down on the risks and losses associated with management by human fund managers 2 | |
how a quant fund works | quant funds rely on algorithmic or systematically programmed investment strategies as such they don t use the experience judgment or opinions of human managers to make investment decisions 3 they use quantitative analysis rather than fundamental analysis which is why they re also called quantitative funds 4 not only can they be one of many investment offerings supported by asset managers but they may also be part of the central management focus of specialized investment managers greater access to a broader range of market data fueled the growth of quant funds not to mention the growing number of solutions surrounding the use of big data developments in financial technology and increasing innovation around automation have vastly broadened the data sets quant fund managers can work with giving them even more robust data feeds for a broader analysis of scenarios and time horizons 5large asset managers have looked to increase their investment in quantitative strategies as fund managers struggle to beat market benchmarks over time smaller hedge fund managers also round out the total quant fund offerings in the investment market 6 overall quant fund managers seek talented individuals with accredited academic degrees and highly technical experience in mathematics and programming 7quantitative strategies are often referred to as a black box due to the high level of secrecy surrounding the algorithms they use quant fund programming and quantitative algorithms have thousands of trading signals they can rely on ranging from economic data points to trending global asset values and real time company news quant funds are also known for building sophisticated models around momentum quality value and financial strength using proprietary algorithms developed through advanced software programs 2quant funds have attracted a considerable amount of interest and investment because of the returns they have generated over the years however according to a report by institutional investor they ve been underperforming since 2016 in the five years leading up to 2021 the report said the msci world index and the equity quant index generated annualized returns of 11 6 and 0 88 respectively 8institutional investor claimed that the equity quant index was up 10 2 in 2010 15 3 in 2011 8 8 in 2012 14 7 in 2013 10 4 in 2014 and 9 2 in 2015 8the basis for quantitative analysis and therefore quant funds has a history that dates back eight decades with the publishing of a 1934 book called security analysis written by benjamin graham and david dodd the book advocated investing based on the rigorous measurement of objective financial metrics related to specific stocks security analysis has been followed by further publications related to quantitative investment strategies such as joel greenblatt s the little book that beats the market and james o shaughnessy s what works on wall street special considerationsquant funds are often classified as alternative investments since their management styles differ from more traditional fund managers quant funds typically run on a lower cost basis because they don t need as many traditional analysts and portfolio managers to run them however their trading costs tend to be higher than traditional funds due to a higher turnover of securities their offerings are also generally more complex than standard funds and it is common for some of them to target high net worth investors or have high fund entrance requirements 2some investors consider quant funds to be among the most innovative and highly technical offerings in the investment universe they encompass a wide range of thematic investment styles and often deploy some of the industry s most groundbreaking technologies successful quant funds keep a close eye on risk control due to the nature of their models most strategies start with a universe or benchmark and use sector and industry weightings in their models this allows the funds to control the diversification to a certain extent without compromising the model itself some have argued that quant funds present a systemic risk and do not embrace the concept of letting a black box run their investments for all the successful quant funds out there just as many seem to be unsuccessful unfortunately for the quants reputation when they fail they often fail big time long term capital management ltcm was one of the most famous quant hedge funds as it was run by some of the most respected academic leaders and two nobel memorial prize winning economists myron s scholes and robert c merton during the 1990s their team generated above average returns and attracted capital from all types of investors they were famous for not only exploiting inefficiencies but using easy access to capital to create enormous leveraged bets on market directions the disciplined nature of their strategy actually created the weakness that led to their collapse ltcm was liquidated and dissolved in early 2000 its models did not include the possibility that the russian government could default on some of its own debt this one event triggered events and a chain reaction magnified by leverage created havoc ltcm was so heavily involved with other investment operations that its collapse affected the world markets triggering dramatic events in the end the federal reserve fed stepped in to help and other banks and investment funds supported ltcm to prevent any further damage quant funds can fail as they are largely based on historical events and the past doesn t always repeat itself in the future while a strong quant team will be constantly adding new aspects to the models to predict future events it s impossible to predict the future every time quant funds can also become overwhelmed when the economy and markets are experiencing greater than average volatility the buy and sell signals can come so quickly that high turnover can create high commissions and taxable events quant funds can also pose a danger when they are marketed as bear proof or are based on short strategies predicting downturns using derivatives and combining leverage can be dangerous one wrong turn can lead to implosions which often make the news | |
what is a quantity adjusting option quanto option | a quantity adjusting option commonly called a quanto option is a cross currency derivative in which the underlying asset is denominated in one currency but settlement is made in another currency at a predetermined exchange rate another name for these options is a guaranteed exchange rate option quanto options come in both call and put varieties understanding the quanto optionquantity adjusting options get their name from their potential currency forward nature with a variable notional or abstract amount hence the term quantity adjusted or quanto for short investors use quantos when they believe that a particular asset will do well in a country but fear that the country s currency will not perform as well thus the investor will buy an option in the foreign asset while keeping the payout in the home currency the quanto option is a type of exotic option these are customizable transactions and are normally traded over the counter rather than on an exchange benefits of quanto optionsall financial markets are volatile and currency markets are not immune a u s based investor who invests directly in a foreign stock index for example is exposed to the risk that the foreign index will underperform and the risk that the currency will fluctuate in the wrong direction at worst both could happen quantos are settled at a fixed rate of exchange that shelters the investor from exchange rate risk at the time of expiration the option s value is calculated in the foreign currency and then converted at a fixed rate into the domestic currency the quanto option removes currency risk for overseas investors that increases investor confidence and encourages investment in smaller or riskier markets both the strike price and the underlying asset are valued in the foreign currency at the time of exercise calculation of the option s intrinsic value is in the foreign currency this foreign currency value is converted to the investor s domestic currency at the fixed exchange rate 12types of quanto optionsquantos are in most ways identical to traditional equity options the critical difference is that they are purchased in the investor s domestic currency but denominated in the asset s foreign currency at inception the quanto contract fixes the exchange rate between the two currencies this fixed exchange rate remains in force for the duration of the contract there are variations on quantity adjusting options contracts one is the nikkei 225 which is traded on the chicago mercantile exchange cme group the underlying asset for the futures contract is the nikkei 225 stock index the contract is settled in u s dollars rather than in japanese yen 3there are also quanto swaps available in a swap one of the counterparties pays a foreign interest rate to the other party while the notional amount is in the domestic currency derivatives with quanto features are common due to their ability to protect the international investor from currency price swings they may be found in futures forwards vanilla options and exotic notes 4 | |
what is a quanto contract | like any options contract a quanto contract is an agreement between two parties to complete a transaction on a specific future date at a specific price the unusual aspect of a quanto contract is its specification that the settlement will be made in a currency other than the one that the investment is valued in | |
what is a quanto swap | a quanto swap is an options contract to exchange interest rates in two distinct currencies the parties pay each other in one of the two currencies a quanto swap may also be called a guaranteed exchange rate swap or a rate differential swap abbreviated diff swap | |
what is the difference between a quanto and compo option | a compo option or comp option is a variation on the quanto option the foreign asset or the payoff price may be denominated in the domestic currency or in a foreign currency with a final decision made at settlement the party who elects to change the settlement currency pays a fee for making the switch the bottom linethe quanto option removes a source of risk from foreign investing that is it protects the investor from a steep decline in the value of the foreign asset s home currency that could coincide with the contract settlement date the contract establishes that the payout will be valued in the investor s currency rather than the foreign currency | |
quantitative analysis qa refers to methods used to understand the behavior of financial markets and make more informed investment or trading decisions it involves the use of mathematical and statistical techniques to analyze financial data 1 for instance by examining past stock prices earnings reports and other information quantitative analysts often called quants aim to forecast where the market is headed 2 | unlike fundamental analysis that might focus on a company s management team or industry conditions quantitative analysis relies chiefly on crunching numbers and complex computations to derive actionable insights quantitative analysis can be a powerful tool especially in modern markets where data is abundant and computational tools are advanced enabling a more precise examination of the financial landscape however many also believe that the raw numbers produced by quantitative analysis should be combined with the more in depth understanding and nuance afforded by qualitative analysis | |
what is quantitative easing | quantitative easing qe is a form of monetary policy in which a central bank like the united states federal reserve purchases securities in the open market to reduce interest rates and increase the money supply quantitative easing creates new bank reserves providing banks with more liquidity and encouraging lending and investment in the u s the federal reserve implements qe policies | |
what was quantitative easing 2 qe2 | qe2 refers to the second round of the federal reserve s quantitative easing program that sought to stimulate the u s economy following the 2008 financial crisis and great recession announced in november 2010 qe2 consisted of an additional 600 billion in purchases of u s treasuries and the reinvestment of proceeds from prior mortgage backed security purchases 1 understanding qe2quantitative easing stimulates an economy through a central bank s purchase of government bonds or other financial assets often central banks use quantitative easing when interest rates are already zero or at near 0 levels this type of monetary policy increases the money supply and typically raises the risk of inflation quantitative easing is not specific to the u s and is used in a variety of forms by central banks around the world qe2 came at a time when the u s recovery remained patchy while equity markets had recovered from 2008 lows unemployment remained high at 9 8 two percentage points above great recession levels 3 the fundamental reason behind qe2 was to shore up bank liquidity and lift inflation at the time of the announcement u s consumer prices had remained stubbornly low 4 interest rates initially rose after the announcement with the 10 year yield trading above 3 5 however from february 2011 three months after the announcement the 10 year yield began a two year year decline falling 200 basis points to trade under 1 5 5 the impact of qe2qe2 was relatively well received with most economists noting that while asset prices were propped up the health of the banking sector was still a relative unknown it was less than two years since the collapse of lehman brothers and with confidence still low it was prudent to promote investment through cheaper money the policy was not without its critics some economists noted that previous easing measures had lowered rates but did relatively little to increase lending with the fed buying securities with money that it had essentially created out of thin air many also believed it would leave the economy vulnerable to out of control inflation once the economy fully recovered two years later the federal reserve embarked on its third round of quantitative easing qe3 2 something that was not as well received with many saying the fed balance sheet had expanded to an already lofty level and it was time to seek alternative strategies | |
what is quantitative trading | quantitative trading consists of trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify trading opportunities price and volume are two of the more common data inputs used in quantitative analysis as the main inputs to mathematical models as quantitative trading is generally used by financial institutions and hedge funds the transactions are usually large and may involve the purchase and sale of hundreds of thousands of shares and other securities however quantitative trading is becoming more commonly used by individual investors understanding quantitative tradingquantitative traders take advantage of modern technology mathematics and the availability of comprehensive databases for making rational trading decisions quantitative traders take a trading technique and create a model of it using mathematics and then they develop a computer program that applies the model to historical market data the model is then backtested and optimized if favorable results are achieved the system is then implemented in real time markets with real capital the way quantitative trading models function can best be described using an analogy consider a weather report in which the meteorologist forecasts a 90 chance of rain while the sun is shining the meteorologist derives this counterintuitive conclusion by collecting and analyzing climate data from sensors throughout the area a computerized quantitative analysis reveals specific patterns in the data when these patterns are compared to the same patterns revealed in historical climate data backtesting and 90 out of 100 times the result is rain then the meteorologist can draw the conclusion with confidence hence the 90 forecast quantitative traders apply this same process to the financial market to make trading decisions historical price volume and correlation with other assets are some of the more common data inputs used in quantitative analysis as the main inputs to mathematical models examples of quantitative tradingdepending on the trader s research and preferences quantitative trading algorithms can be customized to evaluate different parameters related to a stock consider the case of a trader who believes in momentum investing they can choose to write a simple program that picks out the winners during an upward momentum in the markets during the next market upturn the program will buy those stocks this is a fairly simple example of quantitative trading typically an assortment of parameters from technical analysis to value stocks to fundamental analysis is used to pick out a complex mix of stocks designed to maximize profits these parameters are programmed into a trading system to take advantage of market movements quantitative trading techniques are utilized extensively by certain hedge funds high frequency trading hft firms algorithmic trading platforms and statistical arbitrage desks these techniques may involve rapid fire order execution and typically have short term investment horizons advantages and disadvantages of quantitative tradingthe objective of trading is to calculate the optimal probability of executing a profitable trade a typical trader can effectively monitor analyze and make trading decisions on a limited number of securities before the amount of incoming data overwhelms the decision making process the use of quantitative trading techniques illuminates this limit by using computers to automate the monitoring analyzing and trading decisions overcoming emotion is one of the most pervasive problems with trading be it fear or greed when trading emotion serves only to stifle rational thinking which usually leads to losses computers and mathematics do not possess emotions so quantitative trading eliminates this problem quantitative trading does have its problems financial markets are some of the most dynamic entities that exist therefore quantitative trading models must be as dynamic to be consistently successful many quantitative traders develop models that are temporarily profitable for the market condition for which they were developed but they ultimately fail when market conditions change frequently asked questionsbecause they must possess a certain level of mathematical skill training and knowledge quant traders are often in demand on wall st indeed many quants have advanced degrees in fields like applied statistics computer science or mathematical modeling as a result successful quants can earn a great deal of money especially if they are employed by a successful hedge fund or trading firm quantitative traders or quants for short use mathematical models and large data sets to identify trading opportunities and buy and sell securities an aspiring quant trader needs to be exceptionally skilled and interested in all things mathematical a bachelor s degree in math a master s degree in financial engineering or quantitative financial modeling or an mba are all helpful for scoring a job many analysts will also have a ph d in these or similar fields in addition to an advanced degree a quant should also have experience and familiarity with data mining research methods statistical analysis and automated trading systems the primary difference is that algorithmic trading is able to automate trading decisions and executions while a human can be a quant computers are much faster and more accurate than even the most dexterous trader however the bottom line is that the two are not mutually exclusive algorithm trading is normally quantitate trading being done by automated computer algorithms because quant trading requires a mastery of math statistics and programming it is unlikely to be the case that one can simply read a few books and become adept rather successful quants invest a great deal of time and money in formal education industry credentialing and self study additionally the cost of the trading systems and infrastructure to begin trading as a quant are high and capital intensive that said online courses on the subject do exist these could be a great way to get an introduction and try out the field before investing further | |
what is quantity demanded | quantity demanded is a term used in economics to describe the total amount of a good or service that consumers demand over a given interval of time it depends on the price of a good or service in a marketplace regardless of whether that market is in equilibrium the relationship between the quantity demanded and the price is known as the demand curve or simply the demand the degree to which the quantity demanded changes with respect to price is referred to as the elasticity of demand understanding quantity demandedthe price of a good or service in a marketplace determines the quantity that consumers demand a higher price results in a lower quantity demanded and a lower price results in a higher quantity demanded assuming that non price factors are removed from the equation the price of a product and the quantity demanded for that product have an inverse relationship as stated in the law of demand 1an inverse relationship means that higher prices result in lower quantity demand and lower prices result in higher quantity demand a change in quantity demanded refers to a change in the specific quantity of a product that buyers are willing and able to buy this change in quantity demanded is caused by a change in price an increase in quantity demanded is caused by a decrease in the price of the product and vice versa a demand curve illustrates the quantity demanded and any price offered on the market a change in quantity demanded is represented as a movement along a demand curve the proportion that quantity demanded changes relative to a change in price is known as the elasticity of demand it s related to the slope of the demand curve an example of quantity demandedsay that consumers buy two hot dogs per day at a price of 5 per hot dog the quantity demanded is two then consumers only purchase one hot dog per day when vendors decide to increase the price of a hot dog to 6 the quantity demanded moves left on a graph from two to one when the price rises from 5 to 6 but customers want to consume three hot dogs if the price decreases to 4 each the quantity demanded moves rightward from two to three when the price falls from 5 to 4 we can construct a demand curve connecting the three points by graphing these combinations of price and quantity demanded each combination of price and quantity demanded is depicted as a point on a downward sloping line using a standard demand curve the price of hot dogs appears on a y axis and the quantity of hot dogs is on an x axis indicating that the quantity demanded increases as price decreases any change or movement to quantity demanded is involved as a movement of the point along the demand curve and not a shift in the demand curve itself the demand curve effectively remains static as long as consumers preferences and other factors don t change price changes affect the quantity demanded changes in consumer preferences change the demand curve the demand curve for traditional cars would inherently shift if environmentally conscious consumers switch from gas cars to electric cars price elasticity of demandthe proportion to which the quantity demanded changes with respect to price is called elasticity of demand a good or service that s highly elastic indicates that the quantity demanded varies widely at different price points a good or service that s inelastic is one with a quantity demanded that remains relatively static at varying price points insulin is an example of an inelastic good those who need insulin demand it at the same amount regardless of price point | |
what affects quantity demanded | quantity demanded is affected by the price of the product demand will go down if the price goes up demand will go up if the price goes down price and demand are inversely related | |
does quantity demanded apply only to physical goods | no quantity demanded can apply to service products as well a photographer should book more sessions if they offer family portrait sessions for a lower price they ll book fewer sessions if they price them higher | |
what is the difference between demand and quantity demanded | demand and quantity demanded both pertain to purchasing but in different ways demand is how many of an item a consumer is willing to buy it indicates the sheer quantity how many items a consumer will purchase at a specific price is quantity demanded quantity demanded is a more detailed metric 2demand is the entirety of the demand curve when graphed out quantity demanded is a single point the bottom linequantity demanded is the amount of goods or services that consumers demand over a measurement of time it depends on a product s price the relationship between the two is often referred to as the demand curve a good or service can be inelastic if it s immune to demand because consumers demand it regardless of its price as with so many other economic factors the repercussions trickle down to consumers and their wallets | |
what is a quantity discount | a quantity discount is an incentive offered to a buyer that results in a decreased cost per unit of goods or materials when purchased in greater numbers a quantity discount is often offered by sellers to entice customers to purchase in larger quantities the seller is able to move more goods or materials and the buyer receives a more favorable price for them at the consumer level a quantity discount can appear as a bogo buy one get one discount or other incentives such as buy two get one free | |
how a quantity discount works | retailers often get better deals if they order more of the same item for example the cost per unit for t shirts might be 7 50 per unit if fewer than 48 pieces are ordered 7 25 per unit if 49 72 pieces are ordered or 7 per unit if 73 or more pieces are ordered depending on the quantity discount all pieces ordered must be delivered and paid for by a certain date alternatively the purchases and payments can be spread out over a specified period of time by selling in larger quantities the seller can increase their revenues per transaction rpt the vendor can also scale quantity discounts in steps with lower per unit prices at higher quantities to encourage bulk buyers for instance a coat maker that employs steps in its pricing strategy could offer coats at 20 each five for 90 and 10 for 160 advantages and disadvantages of quantity discountsquantity discounting can be fruitful the principal benefit is to increase total sales volume in order to realize economies of scale quantity discounts boost units per transaction upt the resulting increased sales volume can lead to economies of scale in the form of purchasing goods and materials in bulk at a quantity discount from suppliers and the ability to combine incidental per order costs such as shipping and packaging into one sale these economies of scale have the potential to reduce per unit costs to the seller quantity discounting can also come in handy when a seller is keen to lower its inventory taking such action can be particularly useful when the product in question risks going out of fashion or becoming obsolete due to a technological breakthrough there are several caveats to this strategy though the main drawback of quantity discounts is that the discount squeezes profit per unit also known as the marginal profit unless sufficient economies of scale are realized to at least offset the discount offer so if the per unit cost for the coat company is 10 the company makes a 10 profit on every single 20 sale however if the company offers quantity discounts of 2 per coat for orders of five coats and 4 per coat for orders of 10 coats then it makes only 8 in marginal profit on an order of five and 6 in marginal profit on an order of 10 that would of course change if the coat company is able to save money by for example buying in bulk from its suppliers quantity discount vs linear pricing | |
when companies price their goods and services they generally have two options quantity discounting or linear pricing a linear pricing strategy is simpler to manage for business owners than quantity discount pricing and makes it easier for them to maintain the marginal profit on each item | for instance a t shirt company that employs linear pricing would sell a single shirt for 20 five shirts for 100 and 10 for 200 if each shirt costs 10 to make each shirt will bring in 10 in marginal profit regardless of how many are sold in an order the primary drawback of linear pricing is that it does not provide an incentive to buy in larger quantities when customers order only single items the price per transaction stays the same linear pricing also denies the business owner the opportunity to take advantage of economies of scale | |
what is an example of a quantity discount | if a company sells a product that costs 5 buying 100 of those units would cost 500 to entice buyers to purchase its product a company may offer a quantity discount selling 100 units for 450 which would make the per unit cost 4 50 instead of 5 a 10 discount | |
what is the purpose of quantity discounts | the purpose of quantity discounts is purely to sell more products by offering lower per unit costs through quantity discounts a seller entices a buyer to purchase its products since it s a better deal for the buyer | |
how is quantity discount calculated | to calculate the quantity discount divide the total cost by the number of items at each quantity level to determine the per unit cost for example if you are getting 100 items for 300 the per unit cost is 3 300 100 if you are getting 200 items for 400 the per unit cost is 2 400 200 you can then compare these per unit costs to the cost of buying the unit individually without a quantity discount the bottom linequantity discounts mean a buyer is buying in bulk and receiving a lower cost per item than they would if they bought the items individually quantity discounts are cost effective for people or companies who know they need a product consistently for example buying toilet paper in bulk helps save costs for a household similarly if a company knows it needs timber to make houses it can buy in bulk to save on raw material costs | |
what is quantity supplied | in economics quantity supplied describes the number of goods or services that suppliers will produce and sell at a given market price the quantity supplied differs from the actual amount of supply the total supply as price changes influence how much supply producers actually put on the market how supply changes in response to changes in prices is called the price elasticity of supply understanding quantity suppliedthe quantity supplied is price sensitive within limits in a free market higher prices generally lead to a higher quantity supplied and vice versa however the total current supply of finished goods acts as a limit as there will be a point where prices increase enough to where it will incentivize the quantity produced in the future to increase in cases like this the residual demand for a product or service usually leads to further investment in the growing production of that good or service 1in the case of price decreases the ability to reduce the quantity supplied is constrained by a few different factors depending on the good or service one is the operational cash needs of the supplier the quantity supplied depends on the price level which can be set by market forces or a governing body by using price ceilings or floors quantity supplied under regular market conditionsthe optimal quantity supplied is the amount that completely satisfies current demand at prevailing prices to determine this quantity known supply and demand curves are plotted on the same graph quantity is on the x axis and price is on the y axis on the supply and demand graphs the supply curve is upward sloping because producers are willing to supply more of a good at a higher price the demand curve is downward sloping because consumers demand less quantity of a good when the price increases the equilibrium price and quantity are where the two curves intersect the equilibrium point shows the price point where the quantity that the producers are willing to supply equals the quantity that the consumers are willing to purchase this is the market equilibrium quantity to supply if a supplier provides a lower quantity it is losing out on potential profits if it supplies a higher quantity not all of the goods it provides will sell factors that impact the supply curvethree key factors impact the supply curve technology production costs and the price of other goods technological improvements can help boost supply making the process more efficient these improvements shift the supply curve to the right increasing the amount that can be produced at a given price now if technology does not improve and deteriorates over time then production can suffer forcing the supply curve to shift left 2as the cost of producing a product increases with all other things being equal then the supply curve will shift leftward less will be able to be produced profitably at a given price thus changes in production costs and input prices cause an opposite move in supply as production costs rise supply falls and vice versa examples of production costs include wages and manufacturing overhead decreases in overhead costs and labor push the supply curve to the right increasing supply as it becomes cheaper to produce the goods 2the price of other goods or services can affect the supply curve there are two types of other goods joint products and producer substitutes joint products are products produced together producer substitutes are substitute goods that can be created using the same resources joint products for example for a company that raises steers are leather and beef these products are produced together there s a direct relationship between the price of a good and the supply of its joint product if the price of leather goes up ranchers raise more steer which increases the supply of beef leather s joint product now for a producer substitute the producer can produce one good or another consider a farmer who can either grow soybeans or corn if the price of corn increases farmers will look to grow more corn decreasing the supply of soybeans thus an inverse relationship exists before a good s price and the supply of the producer s substitute market forces and quantity suppliedmarket forces are generally seen as the best way to ensure the quantity supplied is optimal as all the market participants can receive price signals and adjust their expectations that said some goods or services have their quantity supplied dictated or influenced by the government or a government body in theory this should work fine as long as the price setting body has a good read of the actual demand unfortunately price controls can punish suppliers and consumers when they are not set at rates that approximate a market equilibrium if a price ceiling is set too low suppliers are forced to provide a good or service that may not return the cost of production including a normal profit this can lead to losses and fewer producers if a price floor is set too high particularly for critical goods consumers are forced to use more income to meet their basic needs in most cases suppliers want to charge high prices and sell large amounts of goods to maximize profits while suppliers can usually control the number of goods available on the market they do not control the demand for goods at different prices as long as market forces are allowed to run freely without regulation or monopolistic control by suppliers consumers share control of how goods sell at given prices consumers want to be able to satisfy their demand for products at the lowest price possible if a good is fungible or a luxury then consumers can curb their buying or seek alternatives this dynamic tension in a free market ensures that most goods are cleared at competitive prices example of quantity suppliedconsider a carmaker green s auto sales that sells automobiles the carmaker s competitors have been raising prices leading into the summer months the average car in their market now sells for 25 000 versus the previous average selling price of 20 000 green s decides to increase its supply of cars to boost profits leading up to the summer months it was selling 100 cars per month earning 2 million in revenue the cost to make and sell each car was 15 000 making green s net profit 500 000 with the average selling price up to 25 000 the new net profit per month is 1 million thus raising the quantity supplied of cars will increase green s profits | |
what is the difference between supply and quantity supplied | supply is the entire supply curve while quantity supplied is the exact figure supplied at a certain price supply broadly lays out all the different qualities provided at every possible price point | |
what is the difference between demand and quantity demanded | quantity demanded is the exact amount of a good or service demanded at a given price more broadly demand is the ability or willingness of a buyer to pay for the good or service at the offered price point demand charts all the amount of demand at each given price | |
what are the factors that affect quantity demanded | five key factors affect quantity demanded the price of the good the income of the buyer the price of related goods consumer tastes and the customer s expectations of future supply and price the bottom linethere are many situations where a supplier may be forced to give up profits or even sell at a loss because of cash flow requirements this is often seen in commodity markets where barrels of oil or pork bellies must be moved as the production levels cannot be quickly turned down there is also a practical limit to how much of a good can be stored and how long while waiting for a better pricing environment | |
what is the quantity theory of money | the quantity theory of money is a theory that variations in price relate to variations in the money supply it is most commonly expressed and taught using the equation of exchange and is a key foundation of the economic theory of monetarism investopedia julie bangunderstanding the quantity theory of moneythe most common version sometimes called the neo quantity theory or fisherian theory suggests there is a mechanical and fixed proportional relationship between changes in the money supply and the general price level this popular albeit controversial formulation of the quantity theory of money is based upon an equation by american economist irving fisher the fisher equation is calculated as m v p twhere m money supplyv velocity of moneyp average price levelt volume of transactions in the economy begin aligned text m times text v text p times text t textbf where text m text money supply text v text velocity of money text p text average price level text t text volume of transactions in the economy end aligned m v p twhere m money supplyv velocity of moneyp average price levelt volume of transactions in the economy generally speaking the quantity theory of money explains how increases in the quantity of money tends to create inflation and vice versa in the original theory v was assumed to be constant and t is assumed to be stable with respect to m so that a change in m directly impacts p in other words if the money supply increases then the average price level will tend to rise in proportion and vice versa with little effect on real economic activity for example if the federal reserve fed or european central bank ecb doubled the supply of money in the economy the long run prices in the economy would tend to increase dramatically this is because more money circulating in an economy would equal more demand and spending by consumers driving prices up criticism of fisher s quantity theory of moneyeconomists disagree about how quickly and how proportionately prices adjust after a change in the quantity of money and about how stable v and t actually are with respect to time and to m the classical treatment in most economic textbooks is based on the fisher equation but competing theories exist the fisher model has many strengths including simplicity and applicability to mathematical models however it uses some assumptions that other economists have questioned to generate its simplicity including the neutrality of the money supply and transmission mechanism the focus on aggregate and average variables the independence of the variables and the stability of v competing quantity theoriesmonetarist economics usually associated with milton friedman and the chicago school of economics advocate the fisher model albeit with some modifications in this view v may not be constant or stable but it does vary predictably enough with business cycle conditions that its variation can be adjusted for by policymakers and mostly ignored by theorists from their interpretation monetarists often support a stable or consistent increase in money supply while not all economists accept this view more economists accept the monetarist claim that changes in the money supply cannot affect the real level of economic output in the long run keynesians more or less use the same framework as monetarists with few exceptions john maynard keynes rejected the direct relationship between m and p as he felt it ignored the role of interest rates keynes also argued the process of money circulation is complicated and not direct so individual prices for specific markets adapt differently to changes in the money supply his theory emphasized that velocity v is not constant or stable but can swing widely based on optimism or fear and uncertainty about the future which drives liquidity preference keynes believed inflationary policies could help stimulate aggregate demand and boost short term output to help an economy achieve full employment the most serious challenge to fisher came from swedish economist knut wicksell whose theories developed in continental europe while fisher s grew in the united states and great britain wicksell along with austrian economists such as ludwig von mises and joseph schumpeter agreed that increases in the quantity of money led to higher prices in their view however an artificial stimulation of the money supply through the banking system would distort prices unevenly particularly in the capital goods sectors this in turn shifts real wealth unevenly and could even cause business cycles the dynamic wicksellian austrian and keynesian models stand in contrast to the static fisherian model unlike the monetarists adherents to the later models don t advocate a stable price level in monetary policy | |
what is the quantity theory of money in the simplest terms | in simple terms the quantity theory of money says that an increase in the supply of money will result in higher prices this is because there would be more money chasing a fixed amount of goods similarly a decrease in the supply of money would lead to lower average price levels | |
what are the assumptions of the quantity theory of money | the quantity theory of money depends on three assumptions about the relationship between money and real economic activity first it assumes that real economic output is determined by the factors of production and independent of the money supply it also assumes a one way causal relationship where the money supply affects prices but not vice versa the final assumption is that the velocity of money or how frequently money changes hands is a constant 1 | |
what are the limitations of the quantity theory of money | while the quantity theory of money can provide some useful generalizations about the role of money in an economy it also relies on some assumptions that have been criticized by economists one of the biggest is the assumption that the velocity of money is constant and that other factors will remain fixed as the supply of money increases in a real world economy each of these variables is likely to fluctuate due to changes in consumer behavior and interest rates moreover the theory may be ineffective at predicting outcomes in situations with interests rates at or near zero a situation known as a liquidity trap the bottom linethe quantity theory of money is an economic formula that describes the relationship between money and prices it demonstrates how an increase in the money supply can cause an increase in price levels assuming that the velocity of money and volume of transactions remain fixed although it is foundational to the theory of monetarism there are competing theories from other schools of economics | |
what is a quanto swap | a quanto swap is a cash settled cross currency interest rate swap where one of the counterparties pays a foreign interest rate to the other the notional amount is denominated in the domestic currency interest rates may be fixed or floating because they depend on the currency exchange rate and differences in interest rates in those currencies they are also known as differential rate differential or just diff swaps another name for these swaps could also be guaranteed exchange rate swap because they naturally embed a fixed currency exchange rate in the swap contract understanding a quanto swapthough quanto swaps deal with two different currencies payments are settled in just one for example a possible quanto swap would involve a u s investor paying six month libor in u s dollars for a us 1 million loan and receive in return payments in u s dollars at the six month euribor 75 basis points fixed for floating quanto swaps allow an investor to minimize foreign exchange risk this avoidance of risk is achieved by fixing both the exchange rate and interest rate at the same time floating for floating swaps have a slightly higher risk in this cross currency swap exposure of each party to the spread of each country s currency interest rate happens quanto swaps and options are useful for investors who want exposure to a foreign market but not foreign exchange risk benefits of quanto swapsinvestors will use quanto swaps when they believe that a particular asset will do well in a country but at the same time fear that the country s currency will not perform as well thus the investor will swap the interest rates with another investor while keeping the payout in their home currency in this way they can separate interest rate risk from exchange rate risk in a typical interest rate swap two agreeable counterparties exchange one stream of future interest payments for another with a basis of a specific principal amount these swaps require the exchange of a fixed interest rate value for a floating rate value the swap may be in either direction but is built to reduce or to increase exposure to the changes in interest rates an interest rate swap may also help obtain a marginally lower interest rate than would have been possible without the swap however for an investor in a different country wishing to engage in a swap in the u s market they first would have to exchange their asset from their home currency into u s dollars each payment is made in u s dollars which the foreign investor must then transfer back into their home currency this strategy will involve potential interest rate risk depending on whether the foreign investor receives floating rate payments it also creates a foreign exchange or currency risk a quanto swap solves this problem because all future exchange rates are fixed at the time of the swap contract writing quanto swaps can exchange a fixed interest rate for a floating interest rate or they can swap between two floating rates this is slightly riskier than a fixed for floating swap requirements for a quanto swapthere are four important considerations when trading a quanto swap the first is the notional value of the underlying asset usually a loan this value is priced in the asset s home currency the second two figures are the index rates of the two currencies which can be fixed or floating one rate represents the interest rate of the home currency the other represents the international currency that is used to settle the transaction the last consideration is the date of maturity when the underlying loan or obligation comes due a quanto is any type of derivative instrument that is settled in a different currency than the underlying asset in addition to quanto swaps there are also quanto options quanto futures and quanto cdss example of a quanto swapas a demonstrative example of a quanto swap imagine a european company that borrows 1 million to fund operations in the united states to be repaid over five years with interest based on the 3 month sofr rate in this example the current sofr is 5 but the euribor is only 1 suppose further that the company expects u s rates to increase relative to european interest rates in that case they would be better off exchanging the sofr based interest payments for a euribor based rate the company would try to execute a quanto swap to replace their sofr based payments for an interest rate based on euribor 4 although they will continue to pay in dollars if the company s predictions about interest rates are correct they will end up saving money in the long run | |
what is a quanto credit default swap | a quanto credit default swap is a credit default swap where the swap premium or cashflows are paid in a different currency than the underlying asset these are useful for international investors who wish to gain exposure to cds in another country but want to reduce their exposure to exchange rate risk | |
what is a quanto option | a quanto option is an options contract that is denominated in a different currency than the underlying asset when the option matures any payoff is received in foreign currency at a fixed exchange rate this is useful for traders who wish to gain exposure to foreign options markets but who do not want to expose themselves to exchange rate risk 1 | |
is a quanto swap the same as a cross currency swap | a quanto swap is not the same as a cross currency swap although there are some similarities a typical cross currency swap involves two parties that exchange principal and cash flows in two different currencies along with predetermined interest rates in a quanto swap one party pays another at a foreign interest rate but using a local currency | |
what is quanto risk | quanto risk refers to the possibility of adverse changes in the asset prices or exchange rates used in a quanto option or swap 2investopedia does not provide tax investment or financial services and advice the information is presented without consideration of the investment objectives risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors investing involves risk including the possible loss of principal | |
what is quantum computing | quantum computing is an area of computer science that uses the principles of quantum theory quantum theory explains the behavior of energy and material on the atomic and subatomic levels quantum computing uses subatomic particles such as electrons or photons quantum bits or qubits allow these particles to exist in more than one state i e 1 and 0 at the same time theoretically linked qubits can exploit the interference between their wave like quantum states to perform calculations that might otherwise take millions of years 1classical computers today employ a stream of electrical impulses 1 and 0 in a binary manner to encode information in bits this restricts their processing ability compared to quantum computing understanding quantum computingthe field of quantum computing emerged in the 1980s it was discovered that certain computational problems could be tackled more efficiently with quantum algorithms than with their classical counterparts 2quantum computing has the capability to sift through huge numbers of possibilities and extract potential solutions to complex problems and challenges where classical computers store information as bits with either 0s or 1s quantum computers use qubits qubits carry information in a quantum state that engages 0 and 1 in a multidimensional way 1such massive computing potential and the projected market size for its use have attracted the attention of some of the most prominent companies 3 these include ibm microsoft google d waves systems alibaba nokia intel airbus hp toshiba mitsubishi sk telecom nec raytheon lockheed martin rigetti biogen volkswagen and amgen uses and benefits of quantum computingquantum computing could contribute greatly to the fields of security finance military affairs and intelligence drug design and discovery aerospace designing utilities nuclear fusion polymer design machine learning artificial intelligence ai big data search and digital manufacturing quantum computers could be used to improve the secure sharing of information or to improve radars and their ability to detect missiles and aircraft another area where quantum computing is expected to help is the environment and keeping water clean with chemical sensors 4here are some potential benefits of quantum computing 5 | |
what is quarter on quarter qoq | quarter on quarter qoq is a measuring technique that calculates the change between one fiscal quarter and the previous fiscal quarter the term is similar to the year over year yoy measure which compares the quarter of one year such as the first quarter of 2024 to the same quarter of the previous year the first quarter of 2023 the measure gives investors and analysts an idea of how a company is growing over each quarter understanding quarter on quarter qqq qoq allows a business to monitor shorter term changes and to progress toward goals or benchmarks set for the year it can provide valuable information as to how a company is performing and allow the company to respond and make process changes if required often the qoq measure is used to compare earnings between quarters for example company abc s first quarter earnings were 1 50 per share and its second quarter earnings were 1 75 per share by calculating the qoq growth between quarters 1 75 1 50 1 50 it s clear that the company has grown its earnings by 16 6 which is a positive indicator for investors quarter on quarter in practice | |
when used as part of a qoq analysis a business would compare financials from q2 april may june to q1 january february march this comparison varies from yoy where the same quarter is compared from one year to the next for example q1 of 2024 is compared to q1 of 2023 in a yoy review | comparing quarters on a year over year yoy basis can be more effective than on a quarter on quarter qoq basis as it gives a broader picture of company health and is not impacted by seasonal issues challenges with qoq analysisthere are circumstances where qoq analysis may not provide a holistic view of the health of an organization for example if an industry experiences seasonal sales variance such as landscapers or seasonal sellers what may appear to be a downward trend may be an industry norm the same can apply if a business experiences higher earnings during a peak season that may reflect abnormally high growth from one quarter to the next an organization may choose to adjust the figures seasonally and compensate for regular shifts in business giving a more accurate picture throughout the year since yoy analysis involves the examination of the same quarter from one year to the next it does not typically require a seasonal adjustment to provide valuable data real world examplea company s earnings report from one quarter to the next can affect the market a disappointing earnings report can cause the stock to plunge as investors try to sell off the stock before the price drops in 2018 amazon s third quarter earnings exceeded analysts estimates but amazon s guidance for the fourth quarter fell short of expectations and the company s stock price plunged in response to the announcement the last quarter of the year includes the holidays and is typically amazon s busiest season fourth quarter revenue guidance was significantly below the consensus and caused concern among shareholders amazon stock plunged by 10 although it eventually recovered as investors priced in the news | |
how does quarter on quarter qoq work | quarter on quarter qoq compares performance change between one fiscal quarter and the previous fiscal quarter it reflects short term changes in various metrics and can indicate company performance over two quarters | |
how does qoq benefit a business | qoq lets a company monitor shorter term changes and progress toward goals or benchmarks set for the year the measure can provide valuable information on a business s performance and allow the business to respond and make process changes if it has to | |
where is qoq less effective | an industry that experiences seasonal sales variance may not get an accurate picture of their well being from qoq analysis a downward trend may be an industry norm the same goes for a business that experiences higher earnings during a peak season that may reflect abnormally high growth from one quarter to the next the bottom linequarter on quarter qoq calculates the change between one fiscal quarter and the previous fiscal quarter the measuring technique gives investors and analysts an idea of how a company is growing over each quarter | |
what is quarter over quarter q q | quarter over quarter q q is a measure of an investment or a company s growth from one quarter to the next q q growth is most commonly used to compare a company s growth in profits or revenue although it can also be used to describe changes in an economy s money supply gross domestic product gdp or other economic measurements understanding quarter over quarter q q investors and analysts examine financial statements which are released either yearly or quarterly to assess the financial health of a company the quarterly statements are publicly available through the edgar database provided by the securities and exchange commission sec or a company s website and are called 10 q statements analysts look at q q numbers and changes when reviewing a company s performance over multiple quarterly periods q q is a rate of change in performance between one fiscal quarter and the previous quarter a quarter is generally three months or 90 days q q measures the changes in the growth rate of different financial numbers and metrics found in the financial statements from one period to the next typically the comparison is between reports from one quarter of the company s fiscal year with the reports from the previous quarter q q is calculated as follows current quarter previous quarter previous quartercertain economic reports are released quarterly and compared to previous quarters to indicate economic growth or decline for example the gross domestic product gdp report released by the bureau of economic analysis bea is released on a quarterly basis and influences the decisions of the government businesses and individuals the report shows how gdp has changed from one quarter to the next and can signal possible economic outcomes such as a recession or depression as a recession is considered to be a decline in gdp over two consecutive quarters analyzing the change in gdp from quarter to quarter will allow policymakers to make policy adjustments to avoid further economic fallout for example if they are witnessing a declining gdp variations of quarter over quarter q q other variations of q q are month over month m m and year over year yoy the month over month measures growth over previous months but tends to be more volatile than q q as the rate of change is affected by one time events such as natural disasters the yoy measures changes in performance in one year over the previous year yoy incorporates more data and thus provides a better long term picture of the underlying report figure the q q rate of change is typically more volatile than the yoy measurement but less volatile than the m m figure real world examplethe table below shows the q1 and q2 earnings of intel corporation and ibm corporation for 2018 in millions intelibmq1 earnings 4 500 1 700q2 earnings 5 000 2 400q q change 5 000 4 500 4 500 2 400 1 700 1 700 | |
what is a fiscal quarter q1 q2 q3 q4 | a fiscal quarter is a three month period on a company s financial calendar that acts as a basis for periodic financial reports and the paying of dividends a quarter refers to one fourth of a year and is typically expressed as q1 for the first quarter q2 for the second quarter and so forth subscribe to term of the day and learn a new financial term every day stay informed and make smart financial decisions sign up now investopedia julie bangunderstanding quartersmost financial reporting and dividend payments are done quarterly not all companies will have fiscal quarters that correspond to calendar quarters and it is common for a company to close its fourth quarter after its busiest time of year dividends are also often paid quarterly although many companies outside the u s may not pay dividends evenly companies have two main accounting periods the fiscal quarter and the fiscal year fy the fiscal year for most companies runs from jan 1 to dec 31 although it doesn t have to the standard calendar quarters that make up the year are as follows some companies have fiscal years that follow different dates costco wholesale corporation s fiscal year begins in september and ends in the following august thus its fiscal fourth quarter includes june july and august 1fiscal quarters for a company will coincide with their fiscal year fy and the fourth fiscal quarter will also conclude on the same date as the fiscal year the seasonality effectcompanies investors and analysts use data from different quarters to make comparisons and evaluate trends for example it is common for a company s quarterly report to be compared to the same quarter of the previous year many companies are seasonal which would make a comparison over sequential quarters misleading a retail company could earn half its annual profits in the fourth quarter while a construction company does most of its business in the first three quarters in this situation comparing the first quarter results for a department store to its performance during the fourth quarter would indicate an alarming drop in sales evaluating a seasonal company during its slow quarters can be enlightening it is reasonable to assume that if sales and profits are growing in the off quarters when compared to the same quarter in prior years the intrinsic strength of the company is also improving for example auto dealers typically have a slow first quarter and rarely conduct incentive sales programs in february and march thus if an auto dealer saw significant improvement in sales in the first quarter this year compared to last it may indicate the potential for surprisingly strong sales in the second and third quarters as well uses of fiscal quartersthere are several different ways in which companies interact with fiscal quarters public companies generally have more reporting requirements than private companies and specific decisions public companies make i e issuing dividends revolve around quarters companies aren t the only ones using quarters for financial reasons the internal revenue service requires certain taxpayers to make quarterly estimated tax payments using form 941 this form is used to remit payroll taxes multiple times in a single year 2quarterly earnings reports are important for publicly traded companies and their investors each release has the potential to affect the value of a company s stock if a company has a good quarter its stock value may increase if the company has a poor quarter the value of its stock could drop dramatically all public companies in the u s must file quarterly reports known as form 10 q with the securities and exchange commission sec at the end of their first three fiscal quarters each 10 q includes unaudited financial statements and operations information for the previous three months quarter 3a publicly traded company must also file an annual report known as form 10 k the annual report will often include more detailed information than the quarterly reports including an audit statement presentations and additional disclosures 3the quarterly earnings report often includes forward looking guidance for what management expects from the next few quarters or through the end of the year these estimates are used by analysts and investors to develop their expectations for performance over the next few quarters the estimates and guidance provided by analysts and management can have a big impact on a stock every three months if management issues guidance for the next quarter that is worse than expected the stock s price will drop similarly if management issues guidance or an analyst upgrades their independent estimates the stock can rise significantly in the u s most companies that pay a dividend will distribute it more or less evenly over four quarters in many economies outside the u s it is common to split the annual dividend into quarterly payments with one of the payments being much larger than the others it is also not unusual to find companies outside the u s that only pay one dividend per year the payment of quarterly dividends can create some volatility in a stock s price when the ex date arrives some analysts have noticed that investors may rebalance or sell their stock on the ex date or soon after when the dividend growth rate appears to be slowing or other changes in the market make the dividend less attractive some companies may report using halves or h1 and h2 to divide their year into two parts instead of four the first half of the year or h1 always includes the first and second quarter the second half of the year or h2 always includes the third and fourth quarter for a variety of reasons some public companies will use a non standard or non calendar quarterly reporting system in addition certain governments use different quarter systems the first quarter of the u s federal government s fiscal year is october november and december state governments may also have their own fiscal calendars 4sometimes a company may have a non standard fiscal year to help with business or tax planning the internal revenue service irs allows companies to choose a tax year that is still 52 53 weeks long but does not end in december 5in 2021 h r block hrb changed its fiscal year to end on june 30th from the previous april 30th 67 upon announcing this it stated that the change allows for better alignment of complete tax seasons in comparable fiscal periods and other related benefits 8releasing an annual report which may be accompanied by shareholder meetings and additional disclosures after the busiest part of a company s year helps managers and shareholders make better decisions about the year ahead companies that rely on u s government contracts may use september as the end of their fiscal year and the fourth quarter because that is when they expect new projects to be closed and budget planning from the government to be available meanwhile some companies have very unusual quarterly systems popular companies fiscal yearswhile many companies follow the standard calendar year for their fiscal reporting several major corporations choose different fiscal calendars to align better with their business cycles apple inc has a fiscal year that ends on the last saturday of september by avoiding a calendar year fiscal cycle apple can better align its financial reporting with its product launch schedule which typically sees new iphone releases in september this timing allows apple to capture the early sales surge from its flagship products in the first quarter of the fiscal year providing a more accurate reflection of its financial performance following major product launches nvidia corporation a leader in graphics processing units gpus and ai technology ends its fiscal year on the last sunday of january this schedule helps nvidia to account for the increased demand during the holiday season which is a critical period for sales in the gaming and technology markets by concluding its fiscal year after this peak period nvidia can provide a comprehensive overview of its financial health following its busiest sales quarter walmart inc one of the largest retail corporations globally concludes its fiscal year on january 31 this timing allows walmart to include the entirety of the holiday shopping season in its fourth quarter results the extended holiday period significantly impacts walmart s revenue and ending the fiscal year in january ensures that the company s annual report reflects this crucial season s sales performance criticism of quarterssome have questioned the importance of the quarterly reporting system the big argument against the setup is that it puts too much pressure on companies and executives to deliver short term results to please analysts and investors as opposed to focusing on the long term interests of the business the other issue is that companies report their summary annual statements once per year so the information can become stale and out of date in between the annual reporting cycle one approach to solve this problem is to use a trailing four quarters or trailing 12 months ttm analysis by the middle of the fourth quarter of 2021 the annual data for 2021 can be estimated by summarizing the last four quarters in this case assume that the company s third quarter 2021 results are available an analyst would manually combine the quarterly data from the first three quarters of 2021 with the last quarter of 2020 to estimate the company s earnings and revenue trends this analysis will overlap some of the data used in the last annual report but it will still give some insight into how 2021 is likely to look by the end of the year if the first three quarters of 2021 had been poor compared to the first three quarters of 2020 the trailing four quarter analysis will show that given that there are so many variables that have to be accounted for with each new quarter using the best accounting software is a great way to help accountants save time and ensure all reporting is accurate | |
what are the 4 fiscal quarters | a fiscal quarter is a three month period in which a company reports its financial results as its name suggests there are four quarterly periods in a year meaning a publicly traded company would issue four quarterly reports per year companies and investors alike use fiscal quarters to keep track of their financial results and business developments over time these quarters are often referred to as q1 q2 q3 and q4 a company can choose how to divide a calendar year into these four quarters companies will often end a quarter at the end of march june september and december a company can elect to have its fiscal year end anytime thereby impacting how its quarters are divided | |
what is the difference between a fiscal quarter and a calendar quarter | fiscal quarters do not have to line up with the calendar year for instance if a company chooses to have its fiscal year starting in february rather than january then its first quarter would consist of february march and april companies sometimes choose to do this if they want their fiscal year to end in their own peak season alternatively since finishing the year often involves a lot of additional accounting work some companies choose to end their fiscal year on a relatively calm month | |
what does q4 2022 mean | there are two components to q4 2022 the first part q4 represents the quarter while the second part 2022 represents the year in this example the phrase q4 2022 means the fourth quarter in 2022 because this phrase includes both the quarter and the year this phrase assumes that whatever is being analyzed has a fiscal year that is the same as a calendar year | |
what is the fiscal calendar | a fiscal calendar is an arbitrary range of dates that defines a company s annual reporting cycle instead of simply using a standard calendar year that runs from january to december a company can decide to use a different calendar cycle for reporting that better aligns with its operations cyclicality or seasonality for example a company may elect to have a fiscal year ending in june although the calendar year runs from january to december the company s year end income statement will run from july 1 to june 30 | |
what is the difference between fiscal and calendar quarters | if a company decides to have a fiscal year different than a calendar year the dates for each quarter may be different however if a company decides to report financial information on the same dates as a standard calendar cycle the dates are quarter 1 jan 1 through march 30quarter 2 april 1 through june 30quarter 3 july 1 through sept 30quarter 4 oct 1 through dec 31the bottom lineorganizing financial planning and reporting into three month quarterly units enables companies and those that analyze and govern them to track progress set requirements and make useful comparisons some critics feel undue focus on quarters promotes short term thinking and planning and can make some information out of date but generally organizing information this way and quarters don t have to follow the traditional calendar increases the ability to organize information and recognize potential problems early | |
what is quarter to date qtd | quarter to date qtd is a time interval that captures all relevant company activity that occurred between the beginning of the current quarter and the point at which the data was gathered later in the quarter quarter to date information is typically gathered in situations when the entire quarterly period has not yet ended and it can allow management to see how the quarter is shaping up understanding quarter to date qtd in financial parlance a quarter refers to a three month period during a fiscal year because there are 12 months in a year there are four quarters first quarter q1 second quarter q2 third quarter q3 and fourth quarter q4 to determine how a company is performing during a given quarter management may want to pull up data from the beginning of the quarter for a certain area to gauge how it has performed thus far for example a company may have a target revenue of 5 million for the quarter the end of the quarter is still one month away and management would like to see the quarter to date revenue to determine if they are on track to meet the 5 million target depending on the result the qtd information helps management make a decision to either stay on course as the company is on track or to adjust course because they are going to miss their target number qtd information allows management to investigate why a certain metric is not on target and to correct the issue this is particularly useful when comparing the same periods to prior fiscal years or to other quarters quarter to date data analysismany companies spend a great deal of time preparing their quarter to date reports all information must be clean and free of errors appropriately used accurate and timely qtd reporting can help a company take action on improving its performance a qtd analysis is most effective towards the end of the quarter as there is more meaningful data available to assess the quality of results that being said needed changes are more impactful earlier in the quarter as there is more time to effect change management must find a balance between the two a qtd analysis is typically only for internal use rather than for external use because the securities and exchange commission sec does not require companies to report information before a quarter has ended qtd information is a tool for management to determine the progress of the business as such there are not many qtd comparisons between companies because management may pull information at different times within a quarter that being said final quarterly results are very much comparable between companies | |
what are quarterly income debt securities quids | quarterly income debt securities quids are tradable debt instruments that pay a quarterly coupon understanding quarterly income debt securities quids quarterly income debt securities quids generally involve senior unsecured debt issued in small denominations with long maturities investors could expect a common issuance of quids to have a 25 par value per share maturing in 30 years and callable after five years for example goldman sachs originally established the product and registered a service mark for their name in 1996 however their trademark was cancelled in 2003 1the debt issued via quids involves a third party issuer usually created as a subsidiary of a parent company for the sole purpose of issuing debt and loaning the proceeds to the parent issuers use this structure to move shareholders of quids ahead of other creditors in any bankruptcy or other liquidation proceeding mitigating shareholder risk preferred stock and hybrid debt securities that mimic the behavior of preferred stock offer similar benefits however quids coupons represent interest payments for tax purposes and their shareholders typically take priority even over holders of preferred securities in the event of issuer bankruptcy quids holders are paid out before holders of other securities senior and subordinated debtdebt securities offer investors a tradable unit of a debt instrument that aside from special cases like zero coupon bonds generally offers a fixed income stream via a periodic interest payment the primary risk for holders of debt instruments takes the form of default where the debt issuer fails to make contractually obligated payments of interest or principal investors generally balance risk against the amount of profit they expect to make from interest payments over the course of a debt issuance requiring a faster or larger return to compensate for a riskier loan companies may also attempt to lower their cost of borrowing by issuing different kinds of debt based upon a creditor s priority in any liquidation or bankruptcy proceedings subordinated debt lies at the bottom of the priority list meaning holders of subordinated debt get paid only after those who hold senior debt receive their payments similar debt instruments to quidsquarterly income preferred securities quips and trust preferred securitieso trups offer investors similar benefits to quids in the form of regular payment on a preferred security quips feature a structure similar to quids except that the subsidiary lending money to the parent issues its own preferred stock to investors companies that issue trups form a trust rather than a subsidiary corporation investors then receive preferred shares of the trust all three securities resemble one another superficially but each type of security has subtle differences that may or may not match an investor s expectations issuing companies may prefer the tax treatment afforded to one structure or another and decide which type of security to issue accordingly investors should always do their homework and be aware of where they sit in the hierarchy of potential creditors as well as any potential issues with the issuer s solvency | |
how much is a quid | a quid is a colloquial term for the british pound sterling as of july 2023 the value of a quid is equal to approximately 1 30 usd 2 | |
what is quid pro quo | quid pro quo is a latin phrase that literally means something for something suggesting an implied agreement to exchange one service or favor for another this may be required in certain business contexts since courts may strike down a contract that does not include equal considerations quid pro quo agreements are also common in politics although they sometimes suggest shady or unethical business dealings | |
what is quid pro quo harassment | quid pro quo harassment is a form of workplace harassment where unethical requirements are placed as a condition of professional advancement in cases where the requirements involve romantic or sexual behaviors this is also a form of sexual harassment sexual harassment is illegal in the united states canada and many other countries the bottom linequids or quarterly income debt securities are a type of debt instrument that pays interest on a quarterly basis these debt securities are structured so that they are more senior than other holders of the same company s securities meaning that in the event of bankruptcy quids holders will be paid out sooner than other creditors | |
what are quarterly income preferred securities quips | quarterly income preferred securities quips are hybrid preferred stock like securities they represent an interest in a limited partnership or company that exists solely for the purpose of issuing these preferred shares and then lending the proceeds of the sales to its parent company listed on the new york stock exchange nyse they usually have a 25 par value and cumulative quarterly distributions understanding quarterly income preferred securities quips created by goldman sachs co as a marketing tool quarterly income preferred securities quips are an example of hybrid securities aka hybrids combining the features of preferred stock and corporate bonds like bonds they are essentially subordinated debt they have maturity dates and a par value but they look like preferred stock because they represent an ownership stake in a limited company partnership are listed on a stock exchange and make payments in the form of quarterly dividends quips are issued by a special purpose foreign or domestic limited liability company llc or limited partnership lp whatever its structure or nationality this issuing entity is typically a wholly owned subsidiary of a u s corporation and it doesn t do anything like make investments or finance businesses it only exists in fact was created by the parent firm to sell shares of itself to investors the llc or lp raises funds then takes the money it receives and loans it to its parent company the parent receives the proceeds and dutifully pays interest on the borrowed funds back to the subsidiary which then uses the money to pay quarterly dividends to quips holders because the llc or lp is a partnership the full amount of the interest payments has to flow through to the quips holders but no corporate taxes are paid on them first as they would be with regular stock dividends hybrids can pay a higher rate of return than preferred stock because dividends are paid with pretax dollars and therefore they generate a sizable tax break for corporations in fact the parent company gets to deduct the interest payments it makes on the borrowed quips funds on its tax return because technically it s getting a loan from its subsidiary llc or lp while quips are listed and trade on the stock exchange they have finite lifespans like bonds quips typically have maturities of 30 50 years however in some cases the issuers can extend the maturity cycle to a longer time period for example a well known telecom provider initially issued quips that began with a 30 year maturity but then extend the maturity cycle to 49 years another quips issuer abbreviated the maturity cycle from 30 years to a five year non call period but like most hybrid securities the average maturation period is 40 years another form of hybrid securities is monthly income preferred stock or securities mips mips are similar to quips but as the name implies pay income every month special considerationsvia quips the parent company gets the cash it needs plus a tax benefit and investors get a steady dividend seems like a win win all around there s a catch however the issuing lp or llc can suspend or defer its dividends even though they are actually interest payments and not be considered in default as it would be if it missed paying interest on a bond if the issuer of quips fails to make a promised periodic payment investors have no power to force the issuer into bankruptcy but while this characteristic creates added risk for investors the quips structure benefits parent corporations because it does not raise the parent company s debt levels and therefore does not jeopardize its debt ratios | |
what is quarterly revenue growth | quarterly revenue growth is an increase in a company s sales in one quarter compared to sales of a different quarter the current quarter s sales figure can be compared on a year over year basis e g 3q sales of year 1 compared with 3q sales of year 2 or sequentially 3q sales of year 1 compared with 4q sales of year 1 this gives analysts investors and additional stakeholders an idea of how much a company s sales are increasing over time understanding quarterly revenue growth | |
when looking at a company s quarterly or annual financials it is not enough to just look at the revenue for the current period when investing in a company an investor wants to see it grow or improve over time comparing a company s financials from one period to another gives a clear picture of its revenue growth rate and can help investors identify the catalyst for such growth | examplefor example say that xyz corp generated 66 2 billion in revenue for the second three months of the year april to june and 58 7 billion for the first three months january to march therefore the company saw quarterly revenue growth of 12 78 over time if this rate continues it will be an excellent investment zooming out and calculating quarterly growth rates for a multi year period can provide even more insight than simply a six or 12 month period limitations of quarterly revenue growthas an investor there are certain limitations with focusing too much on quarterly revenue growth for example the time between quarters is short in any given multi quarter period the company s results could change drastically with business cycles economic shocks management changes or other internal disruptions to a company s supply chain or operations while strong quarterly revenue growth is one metric for success it s important to look at several quarters and the consistency of growth over time if growth is simply a two or three quarter phenomenon it does not necessarily bode well for a longer term investment on the flip side investors should not be greatly concerned when a company sees poor quarterly revenue growth one or two times in a row for example companies that are seasonal such as tourist companies might have stagnant quarterly revenue growth at certain parts of the year and large spikes at other times again it s important to zoom out and look for a pattern in either direction growth or loss to determine the direction in which a company is moving and if it might be a good potential buy sell hold or short some investors have voiced their frustrations over the quarterly reporting cycle citing that it places too much emphasis on short term results over long term sustainable progress can quarterly revenue growth be negative yes if a company generates less revenues quarter over quarter it will be recorded as negative growth this doesn t necessarily mean that the company is losing money just that it s subsequent quarter saw fewer sales than the prior one | |
why do investors care about quarterly revenue growth | investors expect companies to keep growing over time and so they look to quarterly revenue trends to make sure this is happening in addition revenue growth projections into the future are used by managers and investors to make investment decisions today | |
what is qoq vs yoy | qoq stands for quarter over quarter and measures how some metric such as revenues has changed from one quarter to the next so looking atyoy stands for year over year and instead measures changes based on 12 months ago until the present | |
what is a quartile | a quartile is a statistical term that describes a division of observations into four defined intervals based on the values of the data and how they compare to the entire set of observations quartiles are organized into lower quartiles median quartiles and upper quartiles | |
when the data points are arranged in increasing order data are divided into four sections of 25 of the data each | understanding quartilesto understand the quartile it is important to understand the median as a measure of central tendency the median in statistics is the middle value of a set of numbers it is the point at which exactly half of the data lies below and above the central value the median is a robust estimator of location but says nothing about how the data on either side of its value is spread or dispersed that s where the quartile steps in the quartile measures the spread of values above and below the median by dividing the distribution into four groups they are grouped into four sections of 25 of the data with the second and third groups representing the interquartile range just like the median divides the data into half so that 50 of the measurement lies below the median and 50 lies above it the quartile breaks down the data into quarters so that 25 of the measurements are less than the lower quartile 50 are less than the median and 75 are less than the upper quartile there are three quartile values a lower quartile median and upper quartile which divide the data set into four ranges each containing 25 of the data points calculating quartiles in a spreadsheetsuppose you have a distribution of math scores in a class of 19 students you d want to enter them into a spreadsheet in ascending order in a row you can also use a column use the median function to get the median value then use the quartile function to return the values for each quartile where the second variable in the function is the quartile you re calculating for in this example you should end up with the values for each quartile there is no need to calculate the fourth quartile because it is the last value in your dataset you can see that the first quartile contains scores between 59 and 68 5 and the second quartile scores between 68 5 and 75 the third quartile contains scores between 75 and 81 75 it can help to visualize it calculating quartiles manuallyquartile manual calculation requires more effort as there are formulas involved using the same values as in the spreadsheet example using the following formulas you calculate each quartile | |
where n is the number of integers in your dataset and the result is the position of the number in the sequence dataset so | here we have the q1 fifth value of 68 the q2 tenth and the median value of 75 and the q3 fifteenth value of 84 the results differ slightly from the spreadsheet results because the spreadsheet calculates them differently your graph would then look like this quartiles are also used to calculate the interquartile range which is a measure of variability around the median the interquartile range is simply the range between the first and third quartiles in this example you d have an interquartile range of 68 to 84 the fifth value to the tenth value in the dataset special considerationsif the data point for q1 is farther away from the median than q3 is from the median then you can say there is a greater dispersion among the smaller values of the dataset than among the larger values the same logic applies if q3 is farther away from q2 than q1 is from the median this is called quartile skewness another aspect to consider is if there is an even number of data points in that case you d use the average of the middle two numbers to get the median in the example above if you had 20 students instead of 19 the median of their scores would be the arithmetic average of the tenth and eleventh numbers | |
how do you find the lower quartile of a data set | the best way is to use a spreadsheet and the quartile function for example the function quartile a1 a53 1 returns the first lower quartile of your dataset | |
how do you find the upper quartile of a data set | a spreadsheet and the quartile function is the quickest way to find the upper quartile for example the function quartile a1 a53 3 returns the third upper quartile of your dataset | |
what is the interquartile range of a data set | the interquartile range is the middle 50 of measurements in a data set in other words the range of data between the upper quartile and the lower quartile this is more statistically meaningful than using the full range of data because it omits possible outliers the bottom linequartiles are values that split lists of datasets into quarters resulting in lower middle and upper quartiles the purpose of quartiles is to give shape to a distribution primarily indicating whether or not a distribution is skewed which can be used to determine the consistency of a fund s performance | |
what is a quasi contract | quasi contract is another name for a contract implied in law which acts as a remedy for a dispute between two parties that don t have a contract a quasi contract is a legal obligation not a traditional contract which is decided by a judge for one party to compensate the other thus a quasi contract is a retroactive judgment to correct a circumstance in which one party acquires something at the expense of the other these arrangements may be imposed when goods or services are accepted by a party even though they might not have been requested the acceptance then creates an expectation of payment for the providing party understanding quasi contractsunder common law jurisdictions quasi contracts originated in the middle ages under a form of action known in latin as indebitatus assumpsit which translates to being indebted or to have undertaken a debt 1this legal principle was the courts way of making one party pay the other as if a contract or agreement already existed between them so the defendant s obligation to be bound by the an exchange is viewed to be implied by law from its earliest uses the quasi contract was typically imposed to enforce restitution obligations it would be handed down ordering the defendant to pay restitution to the plaintiff the restitution known in latin as quantum meruit or the amount deserved is calculated according to the amount or extent to which the defendant was unjustly enriched 23this remedy is also referred to as a constructive contract as it is constructed by a judge when there is no existing contract between two parties if there is an agreement or contract already in place a judge will not create a quasi contract because there is no need to do so implied in law contract is an alternate name for a quasi contract quasi contracts outline the obligation of one party to a second when the first receives a benefit or property from the second a person might knowingly or unknowingly give something of value to another without an agreement being made it is assumed that a reasonable person would pay for it give it back or otherwise compensate the giver upon receiving the item or service quasi contracts are awarded as a remedy to a giver to keep them from being taken advantage of and keep others from being unjustly enriched because the agreement is constructed in a court of law it is legally enforceable so neither party has to agree to it 3 the purpose of the quasi contract is to render a fair outcome in a situation where one party has an advantage over another the defendant the party who acquired the property must pay restitution to the plaintiff the wronged party to cover the value of the item certain aspects must be in place for a judge to issue a quasi contract quasi contract vs contracttypes of quasi contractthe types of quasi contract are outlined in sections 68 thru 72 of the contract act of 1872 as follows 4unjust enrichment is what happens when an individual benefits from a situation inappropriately either because of luck or because of another person s bad fortune 5advantages and disadvantages of quasi contractsadvantages of using a quasi contract include the fact that these legal instruments are typically based on the unjust enrichment principle this prevents one party from gaining an undue advantage over another thus it is a safeguard for innocent victims of wrongful acts and a legal alternative to compensation for damages ensuring that the one who provides services or goods gets compensated for the same in order to comply with quasi contracts all parties involved are obliged to follow them as they are created by court order there are also some drawbacks or limitations those who received benefits negligently unnecessarily and by miscount will not be held liable although a person can be liable under a quasi contract he cannot be charged more than the amount he has received under the contract thus there is no provision available for the recovery of more amount than that which has been received by the plaintiff if the plaintiff obtains only part of the services goods that he contracted for originally he cannot claim a compensation as the whole amount is not recovered if there s an express agreement between the parties plaintiffs have to give up all profits though a quasi contract is a legal remedy that provides protection from unjust enrichment of the beneficiaries of the services or goods a plaintiff can get relief only if he can prove that he has suffered losses due to the breach of the contractual obligations of the defendant prevents one party from unfairly benefitting at the expense of anothercourt order is legally bindingnot suitable in all casesamount cannot include additional damages | |
what are quasi contracts | a quasi contract is also known as an implied contract in which a defendant is ordered to pay restitution to the plaintiff or a constructive contract meaning a contract that is put into existence when no such contract between the parties exists | |
what is a quasi contract in simple words | a quasi contract is an obligation between two parties created by a court order rather than an agreement between the parties to prevent enrichment | |
what is a quasi contract example | an example might be if person a offers to pay person b to help them move to a new apartment and agrees to pay the 100 for the help the agreement is verbal and not a formal contract person b commits to the job turns down a different job and shows up on the required day to help with the move but when person b shows up person a tells them that they are not needed after all and that the job is canceled person b files a civil suit to have the missing money paid and a quasi contract might be instituted if the judge agrees that money is owed the bottom linewith a quasi contract a defendant is required to behave as if there was a legal contract with the plaintiff it is designed so that one party is not unjustly enriched at the expense of the other unjust enrichment is when someone benefits unfairly either due to circumstance or the other party s misfortune a quasi contract is rendered by a judge as a settlement after the fact when a formal contract otherwise did not exist | |
what is a quasi public corporation | a quasi public corporation is a company in the private sector that is supported by the government with a public mandate to provide a given service examples include telegraph and telephone companies oil and gas water and electric light companies and irrigation companies quasi public corporations may be established de novo begin as government agencies that become privatized or be the result of a large private company becoming partially nationalized they are often also referred to as public service corporations | |
how quasi public corporations work | like public purpose corporations such as public libraries and adult day centers quasi public corporations are created to benefit the public in some way these private operating companies are presented with a government chartered mission and in exchange for their services usually receive some form of partial funding from the state quasi public corporations may comprise public companies of an industrial and commercial character nationalized companies and companies with majority public shareholding many consider quasi public institutions to be political policy tools because they can in some instances operate with fewer restrictions and greater cost effectiveness than regular government institutions contrary to popular opinion employees of quasi public corporations do not work for the government for those public private corporations that receive some type of government funding such subsidies consist of regular fund transfers intended to compensate for persistent losses euphemistically referred to as negative operating surpluses losses can be incurred by charging prices that are lower than average costs of production as a matter of deliberate government economic and social policy by convention these subsidies are treated as subsidies on products examples of a quasi public corporationone example of a quasi public purpose corporation is sallie mae corp which was founded to advance student loan development another example is fannie mae otherwise known as the federal national mortgage association fnma fannie mae is regarded as a quasi public corporation because it operates as an independent corporation that s not treated as any part of the government while at the same time operating under a congressional charter that aims to increase the availability and affordability of homeownership special considerationsit is not uncommon to see the shares of this type of corporation trade on major stock exchanges giving individual investors the opportunity to gain exposure to the company and any profit it generates while shares of this type of corporation are sold publicly creating value and profit for shareholders comes second to carrying out its public purpose the operations of a quasi public corporation must usually in some way contribute to the comfort convenience or welfare of the general public quasi public corporations are often mistakenly assumed by the public and investors to be branches of the government this creates a perception of safety or risk free investment in their equity and debt as highlighted in the run up to the financial crisis of 2008 debt securities issued by fannie mae and its counterpart freddie mac said on their face that they were not government guaranteed though many investors treated them as if they were public outcry and the pressure from investors when these entities faced bankruptcy helped lead the u s government to bail them out in effect the public perception that these quasi public entities were guaranteed by the government overrode the explicit terms of the securities themselves | |
what is a quasi reorganization | a quasi reorganization is a relatively obscure provision under generally accepted accounting principles gaap which states that under certain circumstances a firm may eliminate a deficit in its retained earnings account by restating assets liabilities and equity in a manner similar to a bankruptcy a firm s stockholders must agree to allow the accounting change which essentially resets the firm s books as though a new company had incurred the assets and liabilities of the old firm 1 understanding a quasi reorganizationalthough the idea of a quasi reorganization has seen some renewed interest the provision is still rarely applied in practice the idea of a quasi reorganization holds appeal for some as it is an idea of a fresh start and is more exciting to investors than slowly digging out from a large deficit of retained earnings some also argue that quasi reorganizations could be an effective method of more accurately resetting the accounting balances of a firm when a serious drop in asset value is not adequately reflected a quasi reorganization remains highly controversial however since it is not truly a change of economic reality but rather a method to make books appear more favorable quasi reorganizations can carry risks to lenders or suppliers that extend credit to firms that have undergone a quasi reorganization because a quasi reorganization makes a company s balance sheet look stronger this brings comfort to lenders in extending credit if the lenders were aware of the actual financial situation of the company they perhaps would not lend money or would lend at a higher rate to compensate for the actual risk taken quasi reorganizations usually require disclosure in the financial statements so lenders should make sure to look out for such items 2 benefits of a quasi reorganizationmany new businesses operate at a loss for several years after inception during this period the sales team makes contacts workers are trained processes are improved on and streamlined and brand recognition is cultivated by the time the company turns its first profit a significant retained earnings deficit may have developed additionally a prolonged recession could turn a profitable company into a company with a retained earnings deficit it is often illegal or prohibited by debt covenants to pay a dividend from retained earnings while operating with a retained earnings deficit 3 in this instance the equity cost of capital can increase materially as investors demand more return for perceived risk here a quasi reorganization could make financial sense | |
when a company undergoes a quasi reorganization it is allowed to continue paying dividends avoids the costs and time associated with a chapter 11 bankruptcy and possibly realizes tax advantages as a quasi reorganization does nothing to improve the actual operational aspect of a business they are usually accompanied by other changes such as consolidations eliminating excess and improving efficiency 3 | goals of a quasi reorganizationthe main goal of a quasi reorganization is to bring the retained earnings balance to zero first overvalued assets should be written down to fair value with a direct reduction in retained earnings although this increases the deficit momentarily it will reduce future depreciation expenses liabilities are also restated to their fair values with any resulting offsets going to the retained earnings deficit 3 once assets have been reduced to fair value either additional paid in capital or the par value of common stock is reduced to balance out the elimination of the retained earnings deficit companies have some flexibility when deciding how to proceed with the quasi reorganization it is possible to reduce par value increase additional paid in capital and zero out retained earnings at the same time 3 | |
what is questioned document investigation | a questioned document investigation is an in depth look into a document that is being questioned in the case of fraud forgery etc the investigation is usually initiated in the event that large sums of money heirlooms or other assets are being called into question by a third party a questioned document investigation may also be called upon to discover altered documents fabricated checks anonymous letters disputed wills and many other disputed documents a forensic analysis of the questioned document will typically involve a comprehensive analysis of the paper ink indentations and tools used to produce the document understanding questioned document investigationa questioned document investigation is used to ascertain the authenticity or lack thereof of a document or other item when it comes into question the discipline of forensic document examination is sometimes referred to as questioned documents analysis and it is frequently associated with white collar crimes such as accounting irregularities check fraud or securities fraud it can also be used to analyze documents related to other types of crimes or misdeeds such as medical malpractice or even analyzing suicide notes for authenticity examiners of questioned documents use an array of heuristic and technological tools and techniques to judge the authenticity of documents or to reveal if something has been altered or tampered with to determine whether a document is genuine an examiner may attempt to confirm who authored or created the document determine the timeframe in which it was created identify the materials used in its preparation or uncover modifications to the original text such as changes additions or deletions to the original text within the scope of finance questioned document investigations are initiated when the authenticity of a firm s financial records are cast in doubt sometimes a firm may cook the books to hide losses or inflate perceived profits such accounting scandals can be revealed by the forensic analysis of financial statements and accounting documents while securities today are represented digitally for the most part in the past the authenticity of physical stock certificates or bound coupons would be questioned as con men and crooks would seek to counterfeit and sell them to unsuspecting investors in the contemporary context internal memos email exchanges invoices or contracts can come under scrutiny and become the subject of a questioned document investigation if the investigation proves no wrong doing the case may be dropped and the allegations of fraud or misconduct dropped on the other hand if the document is considered suspect it may become crucial evidence in a larger criminal or civil case | |
what is queuing theory | queuing theory is a branch of mathematics that studies how lines form how they function and why they malfunction queuing theory examines every component of waiting in line including the arrival process and the number of customers among others which might be people data packets cars or anything else real life applications of queuing theory cover a wide range of businesses its findings may be used to provide faster customer service increase traffic flow improve order shipments from a warehouse or design data networks and call centers | |
how queuing theory works | queuing theory aims to design balanced systems that serve customers quickly and efficiently but do not cost too much to be sustainable as a branch of operations research queuing theory can help inform business decisions on how to build more efficient and cost effective workflow systems the origin of queuing theory can be traced to the early 1900s in a study of the copenhagen telephone exchange by agner krarup erlang a danish engineer statistician and mathematician his work led to the erlang theory of efficient networks and the field of telephone network analysis 1at its most basic level queuing theory involves the analysis of arrivals at a facility such as a bank or a fast food restaurant and an analysis of the processes currently in place to serve them the end result is a set of conclusions that aim to identify any flaws in the system and suggest how they can be ameliorated the fundamental unit of telecommunications traffic in voice systems is called the erlang queuing theory as an operations management technique is commonly used to determine and streamline staffing needs scheduling and inventory in order to improve overall customer service it is often used by six sigma practitioners to improve processes queues are not necessarily a negative aspect of a business as their absence suggests overcapacity in queuing theory the process being studied is broken down into six distinct parameters these include the following special considerationsqueues can occur whenever resources are limited some queuing is tolerable in any business since a total absence of a queue would suggest a costly overcapacity the psychology of queuing is related to queuing theory this is the component of queuing that deals with the natural irritation felt by many people who are forced to queue for service whether they re waiting to check out at the supermarket or waiting for a website to load a call back option while waiting to speak to a customer representative by phone is one example of a solution to customer impatience a more old fashioned example is the system used by many delis which issues customer service numbers to allow people to track their progress to the front of the queue supositorio com offers free online queuing theory calculators with a choice of queuing models applications of queuing theorythe queuing theory can be used and applied in a number of different situations for instance it can be applied to | |
how it works and how involved it may be depends on the complexity of the case involved | example of queuing theorya paper by stanford graduate school of business professor lawrence wein et al used queuing theory to analyze a variety of possible emergency responses to an airborne bioterrorism attack in a public place the model pointed to specific actions that could be taken to reduce the wait time for emergency care thus decreasing the potential number of deaths 2queuing theory is useful if not quite so urgent in guiding the logistics of many businesses the operations department for a delivery company for example is likely to use queuing theory to help it smooth out the kinks in its systems for moving packages from a warehouse to a customer in this case the line being studied is comprised of boxes of goods waiting to be delivered to customers by applying queuing theory a business can develop more efficient systems processes pricing mechanisms staffing solutions and arrival management strategies to reduce customer wait times and increase the number of customers that can be served |
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