The qualities that make financial information useful to users are known as its qualitative attributes. Understandable, relevancy, timeliness, and similarity are the four main qualitative traits.
Understandable: Information is considered understandable if users can comprehend the information and use it to make informed decisions. In order for information to be understandable, it must be presented in a clear and concise manner. The language used should be free of jargon and technical terms, and the information should be organized in a logical manner.
Relevancy: Information is considered relevant, if it has the potential of effecting users’ actions. In order for information to be relevant, it must be material to the decision-making process. Information is material if it affects the economic decisions of users.
Timeliness: Information is considered timely if it is available to users in a timely manner. In order for information to be timely, it must be provided to users in a timely manner. Timely information is information that is provided to users before it loses its relevance.
Similarity: Information is considered similar if users can compare it across time periods and across entities. In order for information to be comparable, it must be presented in a consistent manner. It is important because it allows users to make apples-to-apples comparisons.