Fundamentals & valuation
What is Fundamental analysis?
Hinglish mein padhein: Fundamental analysis kya hota hai?
Fundamental analysis values a company from its business: revenue, profits, balance sheet, cash flow, management and industry.
The aim is to estimate what a business is worth and compare it with the market price. Ratios like P/E, ROE and debt-to-equity are shortcuts for that comparison.
It suits long-term investing; technical analysis is more often used for timing.
Related terms
- P/E ratioThe price-to-earnings ratio divides the share price by earnings per share. It shows how many rupees investors pay for each rupee of annual profit.
- ROE (Return on equity)ROE is net profit divided by shareholders' equity. It shows how much profit the company makes on the money shareholders have invested.
- EPS (Earnings per share)EPS is a company's net profit divided by its number of shares — the profit earned for each share you own.
- Technical analysisTechnical analysis studies price charts, volume and indicators to judge trend and momentum, rather than the company's business.