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Assessing how attractive a firm is as an investment to shareholders. I would like to know the factors that shareholders consider when looking at how attractive a firm is.
May I ask why you are asking me this?
The reason I ask is that to give a complete answer would mean writing a whole page on here, which I am not prepared to do.
Obviously in the exam if this were to be asked it would depend on how many marks were allocated to this part. Given it would never be more than a 10 mark part of a question, that would mean looking to make about 5 decent points.
The main thing shareholders will be interested in always will be the potential for future growth. This would involve looking at past growth, at the quality of the management, at the sector the company is in, the financial structure of the company, and the level of risk. They will also be interested in the retention policy of the company depending on whether the shareholder was looking for dividend growth or for capital growth.
All of these points are, of course, explained in my free lectures 🙂
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