Investability Quotient - IQ

DEFINITION of 'Investability Quotient - IQ'

A term used by Standard and Poor's to describe how good a company's medium to long-term return potential is. While medium to long-term return potential is the major contributor to IQ, other factors are also considered. The scale ranges from a minimum of 0 to a maximum of 250.

BREAKING DOWN 'Investability Quotient - IQ'

Other factors taken into consideration include: credit rating, liquidity, relative strength, and volatility measures.

IQ is an innovative way to incorporate numerous factors and derive a single number. This measure also allows for cross-industry comparisons to be made more easily. However, be careful not to rely too heavily on it.