Fundamental analysis



Now it comes to which company to invest your money in so that you get a good return. It is up to you that in which sector you are interested, whom do you consider to be the hero of the future, which stock can give you good returns in the long term. There are some such shares which are very high price in the stock market, the reason being that the company earns as much and also works for its shareholder. We cannot judge whether the company is good or bad due to a higher or lower share price. If you want to know the condition of the company, then it is necessary to have complete knowledge of fundamental analysis, on the basis of which you can say whether the company is good or bad.


If you want to invest in any company or its stock, then it is very important to know some things about the company, such as who is running it? What percentage of their investment is in that company? What do they actually do? Who are their associates? Who are their competitors? His profit and loss statement every year, how much profit is he making from which product?


All these questions should come in your mind. Fundamental Analysis is the answer to these questions. Now to understand the company, it is very important to understand some of their financial ratios, which can tell you a lot about the company and it will make easier for you to know that company well.
So what is this financial ratio? Nothing much if the profit and loss statement of the company is said in a simple language, then some figures are given by converting them, which you can see very clearly in the moon moment.


The name itself suggests that there will be some ratios which tells some important things, by looking at which you can get an idea of the condition of the company.


Take a look at these financial ratios:
  1. Leverage ratio

  2. Profitability ratio

  3. Market value ratio

  4. Efficiency ratio

  5. Liquidity ratio

Secondly, you have to know the company, you have to be friends with the company, only then you can understand it well, now know how to do this also. Whatever information you can get out about the company, take out all the raw material and see from all angles, what can be handed over to it, what is not there, where can you see it in future, is its management so good that if something bad happens have the ability to handle it or not


It comes as to what can happen in the company that it can drown, it can be ruined. So first of all you have to know about the company debt is there or not and if there is, how much is it increasing or decreasing? If the debt is increasing with time, then it is not a good thing for that company, it is good if the safe investor stays away from this type of company.

A stock does not become expensive due to its high price, say if the price of a share is 2000 and the price of a share is 500, then we cannot say that 500 share is cheap, it would be good to buy it. Being cheap or expensive is determined by the valuation of company, it is only a valuation that can tell whether that stock is cheap or expensive. The company valuation depends on the P E Ratio and P B Ratio which we also call the Price to earnings Ratio and Price to Book Ratio.

Basically fundamental analysis is done for long term investments if someone is short term trader they should’ve go with the technical analysis there is no any long term prospective only you have a knowledge of chart analysis that s coming into the technical analysis