Fundamental Analysis

The fundamental analysis lets you have a glance at the structure of the company. It is responsible for calculating the intrinsic value of the share price. Whether the current price is perfect for a particular share or it is underperforming lets you decide a perfect call. If the share price is underperforming than its intrinsic value then it is relevant to buy and hold that security for a longer period of time. It involves both macro and microanalysis of the company.

Following parameters are involved while doing fundamental analysis:

  • Studying Annual report of the company
  • Checking its past performance. Also, keeping a check on its future projects.
  • Checking its financial statements such as Balance Sheets, P&L Reports, Cash flows, etc.
  • Keeping an eye on the financial ratios such as Return Ratios, Liquidity Ratios, valuations Ratios, etc
  • After that comes the industry evaluation
  • Followed by company's ethical status

It basically lets to pick the correct stock for the portfolio. It also depicts how the company is performing with respect to its peer groups. With the complete insights of the company, fundamental analysis brings the right stock to the portfolio.