Fundamental analysis of a business involves analyzing its financial statements and health, its management and competitive advantages, and its competitors and markets. It is different from other types of investment analysis, such as quantitative analysis and technical analysis.
Fundamental analysis is performed on historical and present data, but with the goal of making financial forecasts. There are several possible objectives:
to conduct a company stock valuation and predict its probable price evolution,
to make a projection on its business performance,
to evaluate its management and make internal business decisions,Fundamental analysis maintains that markets may misprice a security in the short run but that the correct" price will eventually be reached. Profits can be made by trading the mispriced security and then waiting for the market to recognize its "mistake" and reprice the security.Various tools and ratios are used for Fundamental analysis such as the Balance sheets, Profit and loss A/c ,P/E Ratio EPS all of which give the overall picture of the organisation as a whole
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