Fundamental Analysis

What is Fundamental Analysis and stock investing all about?

Fundamental Analysis is a technique which attempts to determine a security's value by focusing on underlying factors that affect a company's actual business and its future prospects. It refers to the analysis of the economic well-being of a financial entity as opposed to only its price movements.

Fundamental Analysis Involves:

Gathering, analyzing, interpreting company, industry & economic information
Completely analysing a company's financial statements and finding out their implications
Performing a bias free valuation in order to come up with a fair value (intrinsic value) of a stock and see whether it is under or overvalued.

What are the Goals of Fundamental Analysis?

To determine the fair value of a company.
To evaluate management integrity and internal business decisions

For whom Fundamental Analysis is relevant?

Fundamental Analysis is relevant for -

Long term investors
Fund managers
Financial advisors
Value Investors

Primarily there are two factors through which fundamental analysis are made- Qualitative & Quantitative. We will go through each of them in the upcoming units.

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