25-08-2017, 09:32 PM
Understanding Fundamental Analysis
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What is Fundamental Analysis?
A method of evaluating a security that entails attempting to measure its intrinsic value by examining certain qualitative and quantitative factors
Fundamental analysts attempt to study everything that can affect the security's value, including macroeconomic factors (like the overall economy) ,industry related factors (key drivers of the industry) and company-specific factors (like financial condition and management).
Quantitative Factors
Financial Data of the Company
Trends in Growth
Broad Macro Economic Factors
Growth in Industries
International Economy
Demographics
Economy Related Factors
Market keeps a watch on critical indicator of economic development
It analyses the impact of an economic indicator on different industries
Hence the impact on an economic factor is not the same
Macro Economic Factors
It is not easy to quantify macro economic factors
However, there is an obvious impact of macro economic factors on a company’s business prospect.
An analyst needs to watch out for only those factors which have long lasting impact on valuation of a company