7 Reasons To Fundamental Analysis

1) Fundamental Analysis is based on fact not opinion

    It does not matter if the sales of a company are high if it’s suffering from losses in
    expenses.

    Example
    Company XYZ is having revenue of 1.2million but has an expense of 1.8 million.
    This shows that it is still making a loss.

2) Shift in a company real value

    If a business is value is changing the financial accounts will show a change.

    Example
    Dividends XYZ Company gives $200 dividends per lot share in 2009
    It gives a $250 dividends per lot in 2010

3) How much is the company worth?

    This is to make sure that one does not pay for overpriced stocks.
    Have rationale reactions to stock prices

    Key figures
    NAV(net asset value)
    P/E ratios (price earnings ratios)
    P/B ratios (price to book ratios)

4) Financial Health of a company

    Financial health can show the potential growth of the company and the survival ability of
    the company in an event of crisis.
    Gearing: How much loan is the company in with its assets
    change

5) Not get consumed emotionally

    Not get consumed emotionally with the fast trading aspects of stocks. News, product
    launches or competitors changes stock prices rapidly.

6) Sizing up bargains during crisis

    "Be fearful when others are greedy. Be greedy when others are fearful." Warren Buffet
     FA teaches us what stocks are undervalued during crisis and will return to its par value
     after crisis.
     NAV(net asset value)
     P/E ratios (price earnings ratios)
     P/B ratios (price to book ratios)

7) Indicator of when to buy and sell

    Financial Analysis helps us understand when is a stock overvalued(to sell) and under
    valued(to buy).

                                                       Hope this video will help