What Is Fundamental Analysis? Company Valuation Guide

Fundamental analysis evaluates a company financial statements and macroeconomic conditions to determine the intrinsic value of its stock.

Key Financial Ratios:

P/E Ratio (Price/Earnings): Stock price divided by earnings per share.

P/B Ratio (Price/Book): Market value to shareholders equity.

Dividend Yield: Dividend per share to stock price.

Debt/Equity Ratio: Shows how leveraged a company is.

Reading Financial Statements:
Balance Sheet: Shows assets, liabilities and equity.
Income Statement: Shows revenues, expenses and net profit.
Cash Flow Statement: Shows where money comes from and where it goes.

Patience is crucial in fundamental analysis. Markets can behave irrationally in the short term but tend to reflect true value over the long term.