A glance at Fundamental Analysis

A glance at Fundamental Analysis

Fundamental analysis is a method to evaluate the intrinsic value of a security (stock, bond, note) based on existing economic, financial and other qualitative or quantitative factor. Fundamental study focus on the macro and micro economics factors of the security that can affect the security’s ‘true’ value of its earning potential and future value. This value then will be compare with the current price to determine the current position of the security (undervalue, on par or overvalue)

For an example, an investor perform fundamental analysis on a stock’s value by looking at the financial statement of the company, such as revenue, earning, cash flow, profit margin etc. Investor also can look at the overall state of the economy, sector or industry that effecting the value of the stock such as potential appreciation of local currency that can effect cost of import and export.  All these data are used to determine a company’s intrinsic value and its potential for future growth. However, In terms of stocks, fundamental analysis mainly focuses on the financial statements of the company being evaluated.

Here, Investuni will simplify the terms use to perform the fundamental analysis as best as we can. Hopefully, it can be helpful for your to perform your own fundamental analysis and understand more about the terms.

Let us know what you want to know about Fundamental Analysis

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