Understanding Fundamental Analysis in Share Market

Fundamental analysis in share market

Share Market is where the investors buy and sells share of publicly listed companies. It is also termed as Equity Market or Stock Market. In the context of share market, three different kinds of analysis are used by investors:

1. Fundamental Analysis in share market
2. Technical Analysis
3. Sentiment Analysis

In this article, we will be discussing about the fundamental analysis. Fundamental Analysis means to evaluate the intrinsic value of a stock through evaluation of financial statements, economic factor and qualitative aspects of the company.

The main aim of fundamental analysis is to determine weather the stock is undervalued or overvalued compared to its original worth. The key components of Fundamental Analysis are:

1. Financial Statements like Income Sheet, Balance Sheet, Cash Flow Statement
2. PE Ratio, EPS, ROE
3. Industry Trends and Market Condiditions.
4. Competitive Position
5. Economic and Political Factors.

Check out BBS NOTES.

Income Sheet

Income sheet is a summarize document of any company’s profit, loss over a specific period of time. It is also know as Profit/Loss Account.

PE Ratio

PE Ratio is a ratio of company’s current share price to its per share earnings. It is also known as Price to Earning ratio or Price to Earning Multiple. The formula of PE ratio is:

PE = Share Price / Earning Per Share

Learn more about P/E Ration from wikipedia.