fundamental analysis: stock with example

There is much confusion about the fundamental analysis of the stock market in this article we discuss how the big players in the market do fundamental analysis but before knowing what is the fundamental analysis we assume that you have to carry some basic knowledge about the stock if you have then read this article with passion or you don't have knowledge about the basics of stock market then read this book

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Then we start the telling about fundamental analysis. First, we discuss what is subcategories of fundamental of stock then let's go

(0) company overview (company basics information and sector growth)

(1) balance sheet

(2) profit and loss statement

(3) cash flow statement

(4) important ratios like PE and PB ratios

(5) history of the company

(6) management analysis (CEO, board and chairman's background)

(7)company sector analysis

(8) forecasting results

(9)valuations of shares(various types)

(10) risk factors


NOTE : (We discuss all topic at beginners levels, not a high configuring technical.fresher can start this type of analyzing stock)




To learn the basics of financial market BASICS OF FINANCIAL MARKET


let's discuss this topic in detailed





(0) company overview

before starting any analysis read the company overview in at least 3 financial stations like moneycontrol.com and investing and moneyworks4me.com

read this company profile to get a basic business of company and knowledge place in this sector

and click her company info company-profile

(1) balance sheet

The balance sheet is a statement where the company shows its position in the market. Read the important point

like (1) growing net profit

(2) growing reserve

(3) deducting liability, interest

(4) growing consumption of raw material

(5) growing working capital

(6) growing operational expenditure

View these images on this link balance sheet


(2) profit and loss statement

the profit and loss statement shows the net profit and loss of the company

net profit increasing is a good sign to buy stock

all related items like gross profit and net profit after tax growing is a good sign to buy


CLICK HERE to see profit and loss statement


(3) cash flow statement

The Cash flow statement shows the operational cash at the end of the year this statement show companies can collect cash from the market be aware this step is more important for fundamental analysis because some time company shows their profit into the balance sheet and profit and loss statement. But the cash management shows into the cash flow statement



to see CLICK HERE cash-flow


(4) important ratios like PE and PB ratios


the ratios also important for the long term investing because ratio gives the importance of information in the numerical wording ratios accumulate the information. I, the very few numbers like p/e ratio shows the price to earning of the company and like this PB and so on ratios show their value

look on the EPS p/e and PB and some like dividend and earning ratios

to see CLICK HERE


(5) history of the company

history shows the quality of company management struggle to stand in the market it' s also shows the board and chairman's behavior with the company.

good history define good management of the company at that time company sales also increase thr1ough his history management and advertising

it also shows past performances of the company like past dividend past earning and price o shares and shares splits and bonus

so the history of the company also helpful for collecting the value of the company.


to see click here


(6) management analysis ( CEO, board and chairman's background)

management analysis is much important than any other analysis because all the data of the company depends upon its board of directors and overall management

  • watch interviews of boards and chairman

  • analysis mind thinking of board of the company

  • what is future plans of companies through management talking

  • get the biography of a company board and chairman life and analysis it

(7) company sector analysis

company stocks price also reacting on the overall sector performance because all industry doing the same things in the market except few things or techniques

go to this link to see sector and industry


(8) forecasting results

the forecasting results is one of the things to do for becoming a good stock peeker.

  • forecast the future company results through company sales

  • quarterly financials

  • companies news

  • management speaking

  • with help of financial ratio like PE, PB and etc

(9)valuations of shares( various types )

there are many methods for calculating the valuations pf company through given financials


  • according to the dividend discount model

  • the P/E ratio approach

  • earning-price ratio

  • expected returns and growth

(10) risk factors

a risk factor is important to factor when you do invest that which time close this position if we getting losses things to do


  • set your target prices

  • set your stop-loss price

  • calculating profits and loses not in price but in percentage

  • risk factors get more result than anything in the market

  • use 1 or 2-month candle to get the risk-reward ratio of our long position

  • in long term, stop loss updating is needed


thank you for reading our article

if you want to read about the stock dividend

read this article

what is stock dividend: as a passive income