The American Association of Individual Investors (AAII) has identified several qualitative factors that should also be considered when evaluating a company's likely future financial performance. Consider the scenario and indicate how you would expect the described event or situation to affect the described business organization. How would you expect this situation to affect the assessment of Eastern's financial condition and performance?

Eastern Manufacturing Products Inc.
Eastem assembles computers in the owner's garage from parts the owner orders over the Internet. This industry is characterized by low barriers to entry, including few operating licenses or governmental approvals, and small investments in productive equipment or facilities.

Although nonquantitative factors may be relevant to a company's financial evaluation in general terms, the details of this specific situation are not relevant to the firm's financial condition or performance.
Its low barriers to entry expose Eastern to increased risk of competition, which could negatively affect the predictability of its expected future sales revenues.
Its low barriers to entry expose Eastern to decreased risk of competition, which could improve the predictability of its expected future sales revenues.