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NISM Certifications · NISM-Series-XV: Research Analyst · Qualities of a Good Research Report

An analyst's report on an Indian FMCG company projects revenue growth of 15% but does not state the assumptions on volume growth, pricing or raw material costs behind it. Which quality of a good research report is mainly lacking?

The report lacks transparency of assumptions. A good research report discloses the key drivers behind its forecasts, such as volume, pricing and cost assumptions, so readers can test, challenge and update the projections. A bare growth figure without its basis is not adequately supported.

  1. ATransparency of assumptions and basis of forecastsCorrect
  2. BUse of a standard font and layout
  3. CInclusion of a company logo
  4. DBrevity of the executive summary

Explanation

A forecast is only useful if the reader can see the drivers behind it, such as volume, price and cost assumptions. Without them the figure cannot be tested or updated. Layout, logo and summary length are cosmetic and do not address the gap.

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