2. Decide which factors to include in each factor group. For example, the manager might believe that P/B, P/E, and P/S ratios are all factors that determine value and place those in the valuation composite. He or she then might decide that the year-on-year percentage change in net profit margin and the year-on-year percentage change in ROE belong in the profitability composite. The interest coverage ratio (ICR) and the firm’s credit rating then might go in the financial soundness composite. Finally, the manager might put a factor such as momentum in the technical composite