Article Content on Date:06-04-2024

Definition : It is a method that attempts to assess the intrinsic value of a stock or an investment by examining related economic, financial and other qualitative and quantitative factors. The fundamental analysis begins with an individual stock but can also extend to a larger context. Explanation: A fundamental analysis helps understand a company, the health of its business and its future prospects. Annual reports and financial statements help get an understanding of the company's comparative advantages (or disadvantages) compared to its competitors. The main reason of conducting fundamental analysis is to produce a value so that an investor can take a call with that security (underpriced = buy, overpriced = sell or short). For assessing the intrinsic value of a stock, this method uses five key elements. They are earnings of the company, profit margin, return on equity, price- earnings ratio and the priceto-book value. After analyzing these factors, investors have a better understanding whether the current market quotation of the stock is undervalued or overvalued. Fundamental analysis can also be performed on sectors and for the economy as a whole. Shares of companies with strong fundamentals tend to go up over time, while fundamentally weak companies fall. This makes fundamental analysis especially important for long-term investors. One of the most famous and successful fundamental analysts is Warren Buffett, who is well known for successfully employing fundamental analysis before investing. Name: Praful Patil Firm Name: PATIL INVESTMENTS Mobile: 9833473537 Email: praful@patilinvestments.co.in