What is Fundamental Analysis
- Thread starter Mohan
- Start date
there are so many other ratios that one has to look at when analysing the stock they are;
P/E ratio or price earnings ratio- this is the companys total market capitalization(market cap) dividend by its total earnings for the last 12 months. In other words, it is the price paid per share relative to the companys earnings per share. It is always a figure like 10 or 74 etc
Market capitalization.- This is not exactly a ratio. It is the product of the number of shares in the hands of investors and the current market value of each share. This ratio is used in categorizing companies by their size ie, small cap, mid cap and large cap companies
Assets turnover- net sales or revenue divided by total assets, used to see how well the assets are used to make money for the business and so the higher this figure the better
Return on assets- net income dividend by the end-of-year total assets and then the figure multiplied by 100 to make it a percentage
Return on equity- calculated by dividing the financial years after tax, after preferred stock dividends and before common stock dividends income by the book value. The bigger this figure and the faster is it growing the better because it means that the company is becoming more efficient with available resources
Return on capital invested[ROIC]- calculated by (net income after taxes)/[total assets-cash in hand-non interest bearing liabilities]. It is another efficiency test for the company
Current ratio- simply current assets divided by current liabilities. It is used to measure a companys liquidity and its short term financial strength, it will look something like 5 or 5x meaning that the current assets are five times the current liabilities
Coverage ratio- the number of times that a companys expense is covered by the earnings
Interest coverage- used to measure the companys ability to pay interest on outstanding debt like corporate bond interest etc. Equal to [earnings before interest and taxes for a fiscal year]/interest payments for the same period. The higher this figure the better because it will mean that the revenues very easily cover their financial obligations n times over
Total debt/equity or gearing ratio. This measures a companys stability. It is equal to total liabilities of the company/total shareholders funds. The higher this ratio the more the interest payments the firm is to pay in future as it means that the company has borrowed a whole lot of money.
Working capital per share- this measures a companys liquidity. Calculated by subtracting current liabilities from current assets and then dividing the answer with the total number of shares outstanding (shares in the investors hands)
Earnings per share- total profits of a company divided by the total number of the companys shares. In most cases, if this figure is growing it means that the company is growing. But investors are warned in financial books not to base their investing on only this value and that it should not be so high.
Dividend per share- total dividends paid to shareholders for the previous financial year dividend by the number of common stock outstanding
Book value per share- a companys book value divided by the number of shares outstanding. BTW the book value is a companys total assets total liabilities-intangible assets like goodwill
Cash flow per share- operating cash flow- preferred stock dividends and the answer is dividend by the total number of shares outstanding
cash per share- indicates the amount of cash in the firm as compared to the number of shares outstanding. Calculated by [cash + marketable securities]/number of shares outstanding
Dividend yield- this is calculated by dividing the total dividends paid out by the current price of the stock
Dividend payout ratio or payout ratio- ratio of dividends paid out by the company to the companys earnings in a financial year
Pre tax profit margin- net profit before taxes divided by net sales
Total debt/ total capital ratio- this one shows the proportion of a companys debt to its total capital. It is used to measure the companys capital structure and financial solvency
Leverage ratio(assets/equity)- this is the total assets of the company divided by the total shareholders equity. It is a measure of the companys leverage ie the degree of utilization of borrowed money. Highly leveraged companys place themselves in a bad place like danger of receivership or bankruptcy if they cannot pay their debts
Other key pieces of information include
Float- this is the total number of shares of a company that are available for the investing public
Shares outstanding- number of a companys shares that are in the hands of investors
Sales(both domestic and foreign)- the amount of money in whatever currecy that the company has made is selling it products
Research and development as a percentage of revenue.- Research and development in a company uses money so this ratio tries to measure the amount used in R&D as compared to revenues in a financial year.
Gross profit margin- calculated gross profit/sales *100=x% meaning that for every dollar(rupee, shilling, peso euro whatever)generated in sales, the said company has 20 cents left to cover basic operating costs and profit
EBITDA margin- the initials mean earnings before interest taxes depreciation and amortization. It is used to measure a companys operating cash flow using its financials like the income statement and the like. It is calculated by adding depreciation and amortization back to pretax income
P/E ratio or price earnings ratio- this is the companys total market capitalization(market cap) dividend by its total earnings for the last 12 months. In other words, it is the price paid per share relative to the companys earnings per share. It is always a figure like 10 or 74 etc
Market capitalization.- This is not exactly a ratio. It is the product of the number of shares in the hands of investors and the current market value of each share. This ratio is used in categorizing companies by their size ie, small cap, mid cap and large cap companies
Assets turnover- net sales or revenue divided by total assets, used to see how well the assets are used to make money for the business and so the higher this figure the better
Return on assets- net income dividend by the end-of-year total assets and then the figure multiplied by 100 to make it a percentage
Return on equity- calculated by dividing the financial years after tax, after preferred stock dividends and before common stock dividends income by the book value. The bigger this figure and the faster is it growing the better because it means that the company is becoming more efficient with available resources
Return on capital invested[ROIC]- calculated by (net income after taxes)/[total assets-cash in hand-non interest bearing liabilities]. It is another efficiency test for the company
Current ratio- simply current assets divided by current liabilities. It is used to measure a companys liquidity and its short term financial strength, it will look something like 5 or 5x meaning that the current assets are five times the current liabilities
Coverage ratio- the number of times that a companys expense is covered by the earnings
Interest coverage- used to measure the companys ability to pay interest on outstanding debt like corporate bond interest etc. Equal to [earnings before interest and taxes for a fiscal year]/interest payments for the same period. The higher this figure the better because it will mean that the revenues very easily cover their financial obligations n times over
Total debt/equity or gearing ratio. This measures a companys stability. It is equal to total liabilities of the company/total shareholders funds. The higher this ratio the more the interest payments the firm is to pay in future as it means that the company has borrowed a whole lot of money.
Working capital per share- this measures a companys liquidity. Calculated by subtracting current liabilities from current assets and then dividing the answer with the total number of shares outstanding (shares in the investors hands)
Earnings per share- total profits of a company divided by the total number of the companys shares. In most cases, if this figure is growing it means that the company is growing. But investors are warned in financial books not to base their investing on only this value and that it should not be so high.
Dividend per share- total dividends paid to shareholders for the previous financial year dividend by the number of common stock outstanding
Book value per share- a companys book value divided by the number of shares outstanding. BTW the book value is a companys total assets total liabilities-intangible assets like goodwill
Cash flow per share- operating cash flow- preferred stock dividends and the answer is dividend by the total number of shares outstanding
cash per share- indicates the amount of cash in the firm as compared to the number of shares outstanding. Calculated by [cash + marketable securities]/number of shares outstanding
Dividend yield- this is calculated by dividing the total dividends paid out by the current price of the stock
Dividend payout ratio or payout ratio- ratio of dividends paid out by the company to the companys earnings in a financial year
Pre tax profit margin- net profit before taxes divided by net sales
Total debt/ total capital ratio- this one shows the proportion of a companys debt to its total capital. It is used to measure the companys capital structure and financial solvency
Leverage ratio(assets/equity)- this is the total assets of the company divided by the total shareholders equity. It is a measure of the companys leverage ie the degree of utilization of borrowed money. Highly leveraged companys place themselves in a bad place like danger of receivership or bankruptcy if they cannot pay their debts
Other key pieces of information include
Float- this is the total number of shares of a company that are available for the investing public
Shares outstanding- number of a companys shares that are in the hands of investors
Sales(both domestic and foreign)- the amount of money in whatever currecy that the company has made is selling it products
Research and development as a percentage of revenue.- Research and development in a company uses money so this ratio tries to measure the amount used in R&D as compared to revenues in a financial year.
Gross profit margin- calculated gross profit/sales *100=x% meaning that for every dollar(rupee, shilling, peso euro whatever)generated in sales, the said company has 20 cents left to cover basic operating costs and profit
EBITDA margin- the initials mean earnings before interest taxes depreciation and amortization. It is used to measure a companys operating cash flow using its financials like the income statement and the like. It is calculated by adding depreciation and amortization back to pretax income
there is two types of analysis FUNDAMENTAL AND TECHNICAL . Technical is charts analysis and fundamental includes, demand & Supply, foreign mkt scenerio, our economy changes, companies's performance... .....
for fundamental analysis I use this http://www.fourstocks.com/stock_screener....this is really helpful for me...
Try to use this http://www.fourstocks.com/stock_screener
It may also helpful for u.
If u get any information regarding this then pls let me know
THANKS
for fundamental analysis I use this http://www.fourstocks.com/stock_screener....this is really helpful for me...
Try to use this http://www.fourstocks.com/stock_screener
It may also helpful for u.
If u get any information regarding this then pls let me know
THANKS
I was looking for a detailed data base...i mean when sites like money control/et gives the stats in a sec for all companies, there must be a common database where we can get the details of ALL A group/B group companies which will help to compare the ratios sectorwise and overall profitabilities..
Do you guys have any idea on access to such databases?
Any help would be great!!!
Thanx!!!
Do you guys have any idea on access to such databases?
Any help would be great!!!
Thanx!!!
fundamental is hard to predict from the balance sheet
one need to look for what are the products required in daily life without which one cannot live or are irreplaceable.
i bought ruchi soya when it was at 20 rs as i like soyabean a lot ,and never imagined of ruchi soya to become a multibagger and sold my holding at 65 rs
following can be the multibagers
1) indriprastha gas
demand of CNG is increasing and it is used in delhi NCR by most of the people.
they have a PNG supply also ,it will spread to whole india one day one cannot image the price of stock then !
2) karaturi global
population is growing and pressure on agriculture industry is growing ,this company has good vision
but overpriced now ,better wait for market to crash and then buy at levels around 20
3) TVS motors
auto sector in india is huge and lots of participants are coming like mahindra.
with average income of indians increasing ,this stock can test levels of 200 in coming 2-3 years
buy at levels of below 70
4) sterling biotech
this company will be a definate multibagger in coming years,good EPS,nice profit generation as compared to market cap,pays good dividend
one cannot imagine sterling biotech was at 2 rs in year 2000 and now tradng at 110+
55 times in 10 years
keep looking for such stocks
one need to look for what are the products required in daily life without which one cannot live or are irreplaceable.
i bought ruchi soya when it was at 20 rs as i like soyabean a lot ,and never imagined of ruchi soya to become a multibagger and sold my holding at 65 rs
following can be the multibagers
1) indriprastha gas
demand of CNG is increasing and it is used in delhi NCR by most of the people.
they have a PNG supply also ,it will spread to whole india one day one cannot image the price of stock then !
2) karaturi global
population is growing and pressure on agriculture industry is growing ,this company has good vision
but overpriced now ,better wait for market to crash and then buy at levels around 20
3) TVS motors
auto sector in india is huge and lots of participants are coming like mahindra.
with average income of indians increasing ,this stock can test levels of 200 in coming 2-3 years
buy at levels of below 70
4) sterling biotech
this company will be a definate multibagger in coming years,good EPS,nice profit generation as compared to market cap,pays good dividend
one cannot imagine sterling biotech was at 2 rs in year 2000 and now tradng at 110+
55 times in 10 years
keep looking for such stocks
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