Fundamental analysis and its place in determining the stock value and forecasting stock price:
many people out there invest money just through by speculation vision and not by reading the stocks historical prices,it is in human mind that the "history repeats itself" so is in the share market also.
Fundamental analysis is the basic analysis of stock market evaluating the probable profitability from stock and the return expected.It is based on historical results in the form of profit and loss statement and balance sheet.It is basically a accounting evaluation.
This analysis is based on the ratios: Ratio means the proportion of some qty or value against the other one, or it is the relative magnitudes of two quantities (usually expressed as a quotient) .
You have to compare these ratios with the other companies or with the same companies past performance.Like for example you have google as a company then either you can examine it along with the ratios of ts competitors like msn and yahoo or against its own past records.
Some of the ratios used primarily in judging the company position are :
Valuation Ratios
P/E Ratio
Price to Sales
Price to Book
Price to Tangible Book
Price to Cash Flow
Price to Free Cash Flow
Growth Rates
Sales Growth Rate
Sales - Growth Rate
EPS Growth Rate
EPS Growth Rate
Capital Spending Gr. Rate
Cap. Spend. Gr. Rate
Financial Strength
Quick Ratio
Infinity
Current Ratio
LT Debt to Equity
Total Debt to Equity
Interest Coverage
Managem't Effectiveness
Return On Assets
Ret/ On Assets
Return On Total Capital
Ret/ On T. Cap. -
Return On Equity
Return On Equity -
Asset Turnover
Profitability Ratios
Gross Margin
Gross Margin -
EBITDA Margin
EBITDA Margin -
Operating Margin
Oper. Margin -
Pre-Tax Margin
Pre-Tax Margin -
Net Profit Margin
Net Profit Margin -
Effective Tax Rate
Eff/ Tax Rate -
Payout Ratio
No comments:
Post a Comment