Fundamental analysis of shares of any company decides its future activities and tells how strong the company is with its work.
Today we tell you that how to do Fundamental Analysis of any stock, we will learn about it with full information so that we can easily do any Fundamental Analysis of Stock in future.
When any investor buys shares of a company, he expects from that company that this company should earn a good profit within the coming few years, before buying shares, complete research has to be done on that company and what is this research. You can read the complete information about it through this article.
What is fundamental analysis explain?
The way we find our good shares to invest in the share market, the process of finding those shares is called Fundamental Analysis.
To earn more returns, investors invest in the stock market and they buy the same shares whose prices are expected to rise in the future.
Fundamental analysis is done before buying any stock so that the condition of any stock can be understood, what is the position of the company with its work, how strong is the company and how much progress is going to be made in the future.
We get information about all these things by doing Fundamental Analysis of the company.
Why should you do fundamental analysis?
As we all know that risk is very high in shares market and to avoid that risk, Fundamental Analysis is done by investments in share market.
One should never buy a share according to its price in the share market, because the price of every share increases every day, sometimes it decreases, but only the fundamental analysis of the stock gives the right information about it.
Due to which it is necessary to do fundamental analysis before investing in the stock market.
How is Fundamental Analysis done?
To do fundamental analysis, we first have to choose a big company whose market-cap is very large, which means that the price of that company is high.
After that the fundamental analysis of the company is done in two ways. Technical analysis and fundamental analysis.
What is Technical Analysis?
Technical analysis can be done by external means of the company to see how the company is looking, but you have not bought shares after doing technical analysis, after doing technical analysis, it is very important for you to do fundamental analysis.
How To Do Technical Analysis
1. Using the company’s chart, which shows about the company’s share price movement, the progress of the company also shows its Share Market Graph (Chart).
2. Understanding Chart-Pattern How the company’s stock comes down and how it goes up Chart-Pattern has a big role in technical analysis.
3. Price-Range also plays a big role in technical analysis, so in technical analysis, you should also analyze the value of the stock.
4. History (Past) It is also very important to see the history of a company to see how it has been performing from behind.
What is Fundamental Analysis?
Fundamental analysis is always used in the long time frame, in this the target is not kept to earn quick money but the focus is on compounding your portfolio at a right rate of return.
To do Fundamental Analysis, things inside the company are examined, what kind of business the company does, what is the financial statement of the company, who are the people associated with the company, what is the PERSONAL BUSINESS EXPERIENCE and BACKGROUND of all these people. We get the information through fundamental analysis.
How To Do Fundamental Analysis
To do fundamental analysis, we have to examine the documents of the company like:-
Fundamental Analysis Kaise Kare
1. View Balance Sheet
2. View P&L (Profit & Loss) Account
3. Checking Cash Flow Statements
4. Viewing Annual Report
5. Viewing Financial Ratio
6. Taking a look at PE Ratio
7. Take a look at EPS Earning Per Share
8. Checking Book Value
9. Management Analysis Taking a look
10. Viewing Profit And Sales Growth
11. Examining Opponent Company
12. Law and Rules of the area in which the company belongs
In this way, in fundamental analysis, we check that – the company whose stock we want to buy, how strong is that company financially, and how much growth that company can grow in the future.
Benefits of Fundamental Analysis
- Risk is reduced.
- The expectation of profit is high.
- The status of the company is known.
- Get to know about the products of the company.
- Get to know about Loss-Profit.
- Stock Market Experience increases.
Fundamental analysis is based on the fact that – If the company makes profit, then the share price of that company will definitely increase, and hence the financial statement of the company is examined in fundamental analysis.