Fundamental Analysis: In Summary

Submitted by Sharemarket News on 13 May, 2011 - 18:24

Learn about fundamental analysis in a nutshell.

In addition to company financials as contained within the annual report, an additional resource for the investor is the share appraisal form. This form serves as indicator of the company's health and provides a method to help you in decision making.

Points in Summary

  • When buying shares, you invest capital and you become part owner of a company. Evaluating the company beforehand thus becomes necessary. Fundamental analysis is the study of factors that affect a company's profits.
  • A trader can get a good picture of company performance, operations and goals by studying the annual report. The annual report details company performance over one year and lists, among other things, it's future projections.
  • In an effort to present the raw data in a nutshell, financial ratios or measures are used to compare different companies. Some ratios include dividend per share, dividend yield, PE ratio and earnings per share.