DEFINITION of 'Soft Metrics'

A slang term for intangible indicators used to value a startup company (can be used for larger firms but hard metrics are preferred). Soft metrics are often related to aspects of a firm that cannot be easily measured but still provide important information in relation to the present and future prospects of a firm. Since soft metrics are not easily measured or identified, quantifying them can be quite difficult.

BREAKING DOWN 'Soft Metrics'

Soft metrics evaluate the things that aren't apparent but may help predict a company's future: are there heavy hitters on the board of directors? Has the management team succeeded before? In comparison to hard metrics, soft metrics can often provide an answer as to why hard metrics may be trending in a certain direction or to unexpected results. Examples of hard metrics would be contributing factors such as net profit margin and free cash flow.

RELATED TERMS
  1. Metrics

    A wide variety of tools that managers and executives can use ...
  2. Multiple

    A term that measures some aspect of a company's financial well-being, ...
  3. Earnings Before Interest, Depreciation, ...

    An earnings metric used in the evaluation of oil, gas and mineral ...
  4. Hard Dollars

    Cash fees or payments made by an investor or customer to a brokerage ...
  5. Price Multiple

    Any ratio that uses the share price of a company in conjunction ...
  6. Price to Free Cash Flow

    A valuation metric that compares a company's market price to ...
Related Articles
  1. Investing

    What are Metrics?

    Metrics are tools that measure a company’s performance.
  2. Financial Advisor

    Key Metrics to Measure Your Advisory Practice

    These key metrics can help financial advisors measure their success.
  3. Investing

    5 Must-Have Metrics For Value Investors

    Focusing on certain fundamental metrics is the best way for value investors to cash in gains. Here are the most important metrics to know.
  4. Investing

    Diluted EPS

    Find out how and why this performance metric is so valuable in analyzing stock.
  5. Investing

    Interpreting A Strategy Performance Report

    These key performance metrics will help you decide if your trading strategy is a winner.
  6. Investing

    Peer Comparison Uncovers Undervalued Stocks

    Learn how to put one of the top equity analysis tools to work for you.
  7. Financial Advisor

    Working Capital

    Working capital is one of the basic metrics used to evaluate a company's financial health. Find out what it can tell you about a stock and learn how to calculate it.
  8. Investing

    Why Goldman Is Warning About Free Cash Flow Yield (GS)

    Learn why Goldman Sachs is alerting investors to the importance of cash flow, and discover a recommended alternative equity valuation metric to free cash flow.
  9. Investing

    Economic Value Added - EVA

    Learn about this metric that measures a company's financial performance based on its residual wealth.
  10. Personal Finance

    Common Interview Questions for Financial Analysts

    Learn more about the career of financial analyst, along with specific potential interview questions and answers for this type of position.
RELATED FAQS
  1. What are the key metrics of the human development index (HDI)?

    Learn the three key metrics that comprise the U.N. Human Development Index and how metric measurement differs in the United ... Read Answer >>
  2. Which metric should I pay more attention to, EV/EBITDA or P/E?

    Examine and compare the relative advantages and disadvantages of the two equity evaluation metrics, EV/EBITDA and the price-to-earnings ... Read Answer >>
  3. What metrics are most commonly used to evaluate companies in the electronics sector?

    Learn what metrics are most commonly used to evaluate companies in the electronics sector and the specific qualities of each ... Read Answer >>
  4. What metrics can be used to evaluate companies in the oil and gas sector?

    Learn how to analyze oil and gas sector companies using the same metrics and analytical techniques as professional investment ... Read Answer >>
  5. What metrics are often used to evaluate companies in the drugs sector?

    Learn about some of the equity evaluation metrics that are most frequently used for examining companies in the pharmaceutical ... Read Answer >>
  6. What metrics can be used to evaluate companies in the financial services sector?

    Explore some of the various equity evaluation metrics that can best be used to assess companies included in the financial ... Read Answer >>
Hot Definitions
  1. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  2. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  3. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  4. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  5. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  6. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
Trading Center