Essay Example on Quantitative & Qualitative Financial Data: A Comparison

Ideally, the qualitative financial data primarily comprises of the subjective data based on non-numeric information, for example, the labor relations, development, management expertise, and industry cycles (Abernathy, Guo, Kubick & Masli, 2019). In contrast, the quantitative financial data focuses on the numeric information that can be measured, including taxes, revenues, profit margins, and expenses (Abernathy et al., 2019). The two types of data are, however, applied interchangeably to examine a corporation's operations, as well as, effectively assess its potential as a productive investment (Abernathy et al., 2019). Concerning this, a case study featured in the Harvard Business Review involving the "Evaluation of the Organization: New Earth Mining, Inc." has significantly used both the quantitative and qualitative information in examining the potential risks and benefits of their investment.

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In essence, the New Earth Mining Inc. is mostly considered as a massive producer of precious metals in the United States. Besides, since the corporation has a robust financial position, it believes in investing other minerals and base metals, and an opportunity to mine iron ore in South Africa is promising for the firm. However, it is associated with significant risks (Fruhan & Wang, 2013). However, to evaluate the potential risks and the reward of this opportunity, lots of quantitative and qualitative data has been identified that is set to affect the success of these investments. A significant example of qualitative data can be illustrated from the iron ore prices that do not seem to depreciate even with the demand increase globally (Fruhan & Wang, 2013). Another crucial qualitative data is evident where the author states that nations such as Japan, South Korea, and China assured of a long-term supply of the raw materials (Fruhan & Wang, 2013). The information is, however, essential for the New Earth corporation as it offered a guarantee that the raw materials contributed significantly to the economic development of these countries (Fruhan & Wang, 2013). Also, the idea of the firm protecting its investment from potential losses in South Africa following the civil war is a vital qualitative information. Equally important, quantitative data is also used in this case study, for instance, when the New Earth corporation performed a pro forma analysis concerning the profit margin of the current investment (Fruhan & Wang, 2013). The study provided promising insights to the firm of constant cash flow if the price would be $80 per ton (Fruhan & Wang, 2013). Also, from the case study, the projected financial package of the New Earth Inc. offered relevant quantitative data since the $200 required for the entire project was negotiable with the overseas purchasers.

Conclusion

Overall, the analysis of both the quantitative and qualitative information played a significant role while examining the financial statements for the new investments. The data adequately assists in making excellent and well-informed management decisions to maintain their top performance.

References

Abernathy, J. L., Guo, F., Kubick, T. R., & Masli, A. (2019). Financial statement footnote readability and corporate audit outcomes. Auditing: A Journal of Practice & Theory, 38(2), 1-26. https://doi.org/10.2308/ajpt-52243

Fruhan, W. E., & Wang, W. (2013). New Earth Mining, Inc. Harvard Business Review Case Study, 913-548. Retrieved from https://www.hbs.edu/faculty/Pages/item.aspx?num=44548