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Fundamental Analysis

The document discusses fundamental analysis, which involves evaluating financial statements, industry reports, and economic factors to determine a firm's intrinsic value. It contrasts fundamental analysis with technical analysis and describes economic analysis techniques like forecasting business cycles, identifying economic expansions and contractions, and understanding how monetary and fiscal policy impact business cycles. The document also covers industry analysis, evaluating a firm's financial position, and stock valuation methods.

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saidutt sharma
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66 views22 pages

Fundamental Analysis

The document discusses fundamental analysis, which involves evaluating financial statements, industry reports, and economic factors to determine a firm's intrinsic value. It contrasts fundamental analysis with technical analysis and describes economic analysis techniques like forecasting business cycles, identifying economic expansions and contractions, and understanding how monetary and fiscal policy impact business cycles. The document also covers industry analysis, evaluating a firm's financial position, and stock valuation methods.

Uploaded by

saidutt sharma
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Fundamental Analysis

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Fundamental Analysis
Fundamental analysis

the practice of evaluating the information


contained in financial statements, industry
reports, and economic factors to determine
the intrinsic value of a firm

M
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Fundamental Analysis
Intrinsic value

the true or economic, value of a firm

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Fundamental Analysis
Fundamentalist

analysts who utilize analysis in an attempt


to forecast future stock price movements

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Fundamental Analysis
versus Technical Analysis
Technical analysis

examination of supply and demand for


securities to determine trends in price
movements of stocks or financial
instruments

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Fundamental Analysis
versus Technical Analysis
Technicians

the term given to analysts who examine


stocks and financial
technical analysis

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markets

using

Economic Analysis
Forecasting business cycles

to determine when to expect changes in the


business cycle, or the direction in which
aggregate economic activity is moving

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Economic Analysis
Business cycle

the movement in aggregate economic


activity as measured by the gross domestic
product (GDP)

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Economic Analysis
Expansion

increasing economic activity

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Economic Analysis
Contraction

decreasing economic activity

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Economic Analysis
Gross Domestic Product (GDP)

a measure of all of the goods and services


produced in the economy
specified time period

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during

Economic Analysis
Recession

two consecutive quarters of economic


contraction, or decline, in the GDP

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Business Cycles - Monetary


Policy and Fiscal Policy
Monetary Policy

the means by which the RBI influences


economic conditions by managing the
nations money supply

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Business Cycles - Monetary


Policy and Fiscal Policy
Fiscal Policy

Government spending, which is primarily


supported by the governments ability to
tax individuals and businesses

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Business Cycles - Monetary


Policy and Fiscal Policy
Deficit spending

situation that occurs when the government


spends more than it collects in taxes

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Industry Analysis
Defensive, or countercyclical, industries

industries that tend to perform best when


the economy is in a contraction or
recession, but are generally the poorest
performers in expanding economies

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Industry Analysis
Industry life cycle

the various phases of an industry with


respect to its growth in sales and its
competitive conditions

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Industry Life Cycle


Industry
Sales

Mature
Expansion
(Growth)

Introductory

Life-Cycle Stages

Evaluating the Firms


Financial Position
Financial statement analysis

comparison to other similar firms


forecast direction for future
predict earnings and dividends
risk evaluation

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Stock Valuation Techniques


Valuation using P/E ratios

ratio computed by dividing the current


market price per share, P0, by the earnings
per share, EPS0

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training to those who wish to excel in their career path. Learning
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basis and provide training and development in the era of Financial
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