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How to deal with certain terms in Fundamental Analysis


At first, let us know what Fundamental Analysis is. Significantly, investors use Fundamental Analysis to find the intrinsic value  of a stock. Generally, the current price may not reflect the actual value of the stock. Straightaway, there are several basic terms in Fundamental Analysis that every investors should be familiar with. Therefore, let’s discuss how to deal with certain terms in Fundamental Analysis.


Sl. No. Term Description
1. Book Value Decreasing book value indicates the increasing liabilities or diminishing assets on the whole. Hence, it should be increasing and never decrease.
2. Current Ratio This should be greater than 1.
3. Dividend Yield This should be in a rising order for about the last 4 to 5 years.
4. Deliverables Generally, higher percentage of deliverables indicates more delivered quantity. Hence, it should be greater than 50%.
5. Debit This should always be in diminishing order on the whole.
6. Debit Equity Ratio Usually, this should be less than 1.
7. Do you like In short, this indicates how do you like or own a particular product of the firm.
8. EPS This should also be in a rising order over the last 4 to 5 years.
9. Future Plans This in fact indicates the plans regarding the growth of the firm. Consequently, you could find out much better ways for the success of your firm.
10. Liabilities This should be decreased in the long run. If it is increasing, find out the reasons and solve accordingly.
11. Net Income Generally speaking, this should always be increased.
12. Net Worth This should also be increased.
13. Net Block It could decrease, but not with a bigger rate.
14. Net Sales This should be increased in brief.
15. PE Ratio Significantly, PE ratio under 15 is a very good state.
16. P/B Ratio Price to Book ratio must particularly be lower with regard to the peer firms.
17. P/S Ratio Price to Share ratio must be less than 1. The stock seems to be better when the ratio is lesser.

Promoter Holding

On balance, this should be in an increasing order or must keep it constant.
19. Pledged Share Specifically, this should be 0.
20. Put/Call Ratio This must also be in an increasing order.
21. Popularity of Product Obviously, this indicates the level of popularity of your products in the market.
22. Quality This shows the quality of the product straightaway. Consequently, the satisfaction of customers with the product’s quality.
23. Revenue This must be in an increasing order in the long run.
24. ROE This should also be in an increasing order. Otherwise, this should be greater than 20% for at least over the last 3 years.
25. ROCE This must be in an increasing order altogether.
26. Reserves This must also be in an increasing order.
27. Share Capital In any event, this too must be in an increasing order.
28. Scope of Product This indicates the scope of your products in future by analyzing its state at the present time. As a result, you could find more ways to increase the scope of your product.
29. Volumes In fact, increased average volume along with increased price indicates a bullish trend.



In conclusion, there are much more terms in Fundamental Analysis which you need to be familiar with. However, these terms could certainly help you get familiar with Fundamental Analysis.


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