Question

write a conclusion paragraph about fundamental analysis descriping the connection in brief about economic, industry, and company and their techniques.

note: it should be as points to be written in one power point slide.

Answer 1

Fundamental Analysis is a holistic approach to study a business. It is critical for an investor to separate the daily short-term disturbances in the stock prices and focus on the underlying business performance. Over a
long term, the stock prices of a fundamentally strong company tend to appreciate, thereby creating
wealth for its investors.

• The financial statement provides information and conveys the financial position of the
  company
• A complete set of financial statements include the Profit & Loss Account, Balance Sheet
  and Cash Flow Statement
• PBT = Total Revenue – Total Expense – Exceptional items
• EPS reflects the earning capacity of a company on a per share basis. Earnings are profit
  after tax and preferred dividends
• The sum of all assets should equal the sum of all liabilities. Only then the Balance sheet is
  said to have balanced
• A legitimate company has three main activities – operating activities, investing activities
  and the financing activities
• Return on Equity (ROE) is a very valuable ratio. It indicates how much return the shareholders
  are making over their initial investment in the company
• Debt to equity ratio measures the amount of equity capital with respect to the debt capital.
  Debt to equity of 1 implies equal amount of debt and equity
• The P/E ratio indicates the willingness of market participants to pay for a stock, keeping
  the company’s earnings in perspective
• The profit and loss statement gives the profitability of the company for the year under
  consideration
• The Net Present Value (NPV) of money is the sum of all the present values of the future
  cash flows