Using the fundamental analysis before buying any particular stock is a always smart choice.

Fundamental analysis and Technical analysis is the most important part of stock market.

Fundamental analysis helps people to find the best stock from the market.It also helps to identify the companies future growth.



how to do fundamental analysis to find a best stock


The successful investors like Warren buffet, Benjamin graham says that using fundamental analysis is the always beneficial. Even i will also recommend you to use fundamental analysis before buying a stock.


What is fundamental analysis-

A fundamental analysis is a technique which is use for to determine a particular company's value.

Fundamental analysis is the great way to find the true value of any business.


The fundamental analysis mainly based on the company's earning growth,  company's financial service, company's market share, company's sales revenue, company's quality etc.

I noticed that most people never research the TA and FA before buying a stock. If you don't know to use the fundamental analysis then you missing the great opportunities.

How to use fundamental analysis-

To using the fundamental analysis, you don't to be a heavy skill. You just need the little-bit business knowledge and common sense.

Fundamental analysis is most important to making investment decision. Here are the some basic fundamental analysis-

1.Read the prospectus-

A prospectus provides the detail information about the company's business.The best way to know the companies background is that read the prospectus. You should definitely read the prospectus before buy any stocks.

2. check the  balance sheet-

The Balance sheet is the best way to know the assets and liabilities of a company. A balance sheet provide the  summary of a financial reports of a company.


3. check the P/E and D/E ratio-

The p/e ratio is the price of a company's stocks earning, Through p/e ratio you can easily compared one company to other company.

A debt ratio use for determine the percentage of a company's asset which is provided through debt.


4. Check the liquidity ratio-

The liquidity ratio provide the company's ability to short term creditors of  the company.

The common liquidity ratios are- Current ratio, Quick ratio, Acid test ratio etc.

If a company has high liquidity ratio in short term obligations then there is a chance that company facing some problems in the long term.


5. Analyse the future performance-


Maybe it's hard for you to analyse the future performance of any company. That's why you should use the technical and fundamental analysis.

Every company have some future plan for their business. You can check the plan through their prospectus.

The  FA and Ta helps people to analyse the companies future performance.


If you are a day trader or a short term investor then technical analysis is the best option for you. But, if you want to invest for long term then i will highly recommend you to use the fundamental analysis.

If you have any doubt, give a comment below.