Analyzing Companies Like a Pro
Fundamental analysis examines a company's financial statements and business model to determine its intrinsic value.
The Three Financial Statements
- Income Statement: Revenue, expenses, and profit over time
- Balance Sheet: Assets, liabilities, and equity at a point in time
- Cash Flow Statement: Actual cash movements in and out
Key Ratios to Analyze
P/E Ratio, PEG Ratio, Debt-to-Equity, Return on Equity, and Free Cash Flow Yield are essential metrics. Compare these to industry averages and historical trends.
Qualitative Factors
Don't forget about management quality, competitive advantages (moat), industry dynamics, and growth opportunities. Numbers tell only part of the story.