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Management Quality Score

Evaluates management's track record using four quantitative signals: capital discipline, margin consistency, shareholder treatment, and revenue execution.

Score: 0–100 Rating: excellent (≥75) | good (50–74) | fair (25–49) | poor (<25)

Signals

Signal Weight Logic
ROIC excellence 35% Average ROIC vs hurdle (default 10%); sustained excess return indicates disciplined capital use
Margin stability 25% Low coefficient of variation in operating margin signals consistent execution
Shareholder orientation 25% Dilution rate — fewer new shares = more shareholder-friendly
Revenue execution 15% CAGR of revenue; consistent growth above zero

Usage

from fin_ratios.utils.management_score import (
    management_quality_score_from_series,
    management_quality_score,
)
from fin_ratios.fetchers.edgar import fetch_edgar

annual_data = fetch_edgar('MSFT', num_years=7)
score = management_quality_score_from_series(annual_data, hurdle_rate=0.10)

print(score.score)    # 77
print(score.rating)   # 'excellent'
print(score.table())

# One-liner
score = management_quality_score('MSFT', years=7, source='edgar')

import { managementQualityScoreFromSeries } from 'fin-ratios'
import { fetchEdgarFlat } from 'fin-ratios/fetchers/edgar'

const annualData = await fetchEdgarFlat('MSFT')
const score = managementQualityScoreFromSeries(annualData, 0.10)

console.log(score.score)   // 77
console.log(score.rating)  // 'excellent'

Minimum Requirements

  • At least 3 years of data (raises ValueError with fewer)
  • net_income, total_equity, total_debt, cash, revenue needed for all signals
  • shares_outstanding needed for dilution signal (gracefully skipped if absent)

Output Structure

@dataclass
class ManagementScore:
    score: int
    rating: str  # excellent / good / fair / poor
    components: ManagementComponents
    evidence: list[str]
    interpretation: str
    hurdle_rate: float

Notes

  • This score does not incorporate qualitative factors (communication, compensation philosophy, governance) — add those using your own weighting on top.
  • Companies in capital-intensive industries (utilities, telecoms) often score lower on ROIC; consider adjusting hurdle_rate downward (e.g. 0.07).

References

  • Mauboussin, M. (2012). The Importance of Capital Allocation. Credit Suisse.
  • Dorsey, P. (2008). The Little Book That Builds Wealth. Wiley.