Questions about quality investing
What is the quality factor?
A ranking of companies by profitability, earnings stability and balance sheet strength. A quality portfolio holds the top of that ranking.
Which ratios measure quality?
Return on equity, return on capital employed, debt to equity and the stability of earnings are common. The glossary defines each.
How is quality different from value?
Value looks at the price paid for earnings or assets; quality looks at the business itself. The combining factors module covers holding both.
Where does business analysis come in?
Path 9 covers moats, earnings quality, capital allocation and leverage, the judgement behind the numbers a quality rule ranks on.