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Fundamental analysis

Fundamental analysis includes the analysis of financial reports of company in order to get information about its value. The value can be observed through the value of their assets, the value of business processes or value of the business potential in the future. So the estimation of value of the company and its shares is a complex job.

Company for its shareholders worths as much as it can earn. But the price of shares at the market depend on various factors: political situation, macro-economic situation, market liquidity and fundamental indicators.

So fundamental analysts tend to judge whether the economy is a stable in country, whether the economy is in the phase of expansion or contraction. After evaluation of macro-economic factors, analysts look at their impact on specific sectors.

Various factors have influence on evaluation of company value. Some of these include: extraordinary gains and losses and inflation.

Analysts estimate the value of company under normal circumstances. However, extraordinary gains or losses may totally distort the estimates.

High inflation makes financial reports unusable over the long term.

Fundamental indicators in their formulas for calculation are taking the parameters of the financial reports of the company. Future income can be estimated using these indicators and therefore the value of the company.

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