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Fundamental Analysis

As the name suggests, fundamental analysis means that we analyze the fundamentals of a company. This includes the financial statements, the management, the business model, the industry, the competition, and the overall economy.

In general, we can divide the fundamental analysis into two parts:

1. Quantitative Analysis
2. Qualitative Analysis

The interesting part about fundamental analysis is that it’s not just about the numbers, but also about the story behind the numbers. It’s about understanding the business, the industry, and the economy.

Quantitative Analysis

Analysing the company based on it’s growth over the years, the profit it makes, the revenue it generates, the cash it has, the debt it has, and so on.

Quantitative analysis includes:

• Hard cold numbers
• Financial results
• Financial ratios
• Sources
  • Balance Sheet
  • Income Statement
  • Statement of Cash Flows

Qualitative Analysis

Analysing the company based on the quality of the management, the business model, the industry, the competition, and the overall economy.

• Not numeric
• Logic and knowledge about an industry
• Sources
  • Management
  • News
  • Business Model
  • Industry
  • Competition
  • Economy

As Steve Ballinger said - “Do YOU understand the company an industry is the key to qualitative analysis”

Table of contents

Quantitative Analysis

Topic	Link
Key financial ratios	Financial Ratios
Valuation Ratios	Valuation Ratios