Evaulating Corporate Management

One of the most difficult task for an investor is how to evaluate company management. The CFA Institute recently published an article describing one method to analyze company management. First, concentrate on the numbers on the balance sheet and income statement. Of particular interest are gross margins, operating margins, income tax rates, foreign sales and earnings translations, and balance sheet concerns. Second, the company should have well understood and written processes for its critical functions. Finally, you should look at management. In this area, you should look for unquestioned integrity, innovation of products and processes, how well employees are treated, and good control of people and processes. If a company meets these screens, it indicates a strong management team.