The capacity to make sound choices is crucial to financial success in the huge world of investment. Fundamental analysis stands out as a crucial tool for discriminating investors amidst a sea of tactics and methodologies. Fundamental analysis is a method that gets to the heart of a firm so that we may make educated investment decisions. This method reveals a security’s true worth by carefully analyzing the company’s accounting records, industry trends, managerial skills, and competitive advantages. This article is about the importance of fundamental analysis and a roadmap it provides to investors to learn more about the businesses they want to invest in.
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The ratios that are part of fundamental analysis include –
- Earnings Per Share (EPS)
- Return on Capital Employed
- Cash Flow
- Revenue
- Operating Profit and Net Profit
- Dividend Yield and Payout Ratio
- Book Value per share
- Price to Book Ratio
- Debt to Equity Ratio
- Return on Equity