The FHR is calculated using quantitative financial statement data only. Qualitative context, such as your growth narrative, ownership structure, strategic contracts, or banking relationships, is not factored into the rating itself. That is a deliberate design choice, and this article explains what it means for you, why the model works that way, and how to make sure the qualitative story behind your numbers still reaches your clients.
What counts as quantitative
Quantitative data is every data point contained within your financial statements: balance sheet line items, income statement line items, and cash flow statement line items. These are the inputs the model works from to produce your 68 financial ratios and, from them, your FHR Methodology Overview.
If it is on your financial statements as a numeric value, the model is using it.
What counts as qualitative
Qualitative context is everything about your business that is not expressed as a line item on your financial statements. Common examples:
Growth narrative. The story behind a change in revenue, including new product launches, geographic expansion, or market tailwinds you expect to continue
Age and size. How long your company has been operating and its relative scale in your industry
Ease of access to capital. Undrawn revolvers, strong banking relationships, confirmed funding commitments
Strategic contracts and arrangements. Long-term customer contracts, cash sweep agreements, exclusivity arrangements, framework agreements
Ownership structure. Private equity ownership, venture capital backing, family ownership, employee ownership
Backing commitments. Parent company guarantees, letters of support, intercompany arrangements
Each of these can meaningfully affect how a client should think about your financial health. None of them appear directly in your FHR.
Why the FHR excludes qualitative context
Three reasons, all of which protect what makes the rating useful to you.
Objectivity. The FHR is an independent, third-party read on your financial health. The moment the model started weighing qualitative factors like "strong contracts" or "experienced management," it would start making subjective judgments, and the rating would be worth less to the clients who rely on it.
Consistency across companies. Every FHR is calculated the same way from the same type of inputs. That is what lets your client compare a rating for your company against ratings for every other supplier they work with. Introducing qualitative inputs would make ratings company-specific and incomparable.
Reliability of inputs. Financial statement data is prepared under recognized accounting standards and, in most cases, independently audited. Qualitative claims are not. A model that weighted them would be weighting inputs of very different reliability as if they were equivalent.
How to communicate qualitative context to your clients
Your qualitative context is real, relevant, and worth communicating. The FHR just is not the vehicle for it. Two practical paths:
Use your FHR as a conversation guide with your client. Share the report, point to the specific drivers behind your score, and add the qualitative context your client needs to interpret it correctly. A weaker ratio tied to a one-time event, a strong growth trajectory not yet reflected in the latest period, a strategic contract that materially changes your revenue stability: all of these land better when paired with the quantitative view the FHR provides.
Use ActionPath to document your trajectory. ActionPath lets you record the strategies and targets you are pursuing and show your clients the projected impact on your FHR before your official rating updates to reflect it. It is also a natural place to attach qualitative context to the quantitative changes you are planning.
If you have significant qualitative context you want on record with our team, you can also raise it in chat and a Member Services team member will follow up.