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.
IMPORTANT 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. |
| 18. |
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. |
CONCLUSION
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.
