Fundamental analysis involves evaluating a company’s financial health and growth potential using key parameters. These include Earnings per Share (EPS), which shows profitability per share; Price-to-Earnings (P/E) Ratio, comparing stock price to earnings; Debt-to-Equity Ratio, which measures a company’s financial leverage; Return on Equity (ROE), showing profitability relative to shareholder equity; and Price-to-Book (P/B) Ratio, assessing market value versus book value. Cash Flow evaluates the company’s liquidity, while Profit Margins reveal efficiency. These metrics provide a comprehensive view of a company’s financial position, helping investors make informed decisions.
Rohan once owned a small manufacturing venture in Chennai. One morning, his supplier called demanding immediate payment — a demand that left him scrambling. He realized that although his books showed “good profits,” he lacked enough liquid assets to settle short-term obligations. That vulnerable morning taught him a powerful lesson: profit does not always mean…
It was early morning in Mumbai. A young investor, Riya, sat nervously staring at her laptop screen. She had just received an alert: “Company X to announce 2:1 stock split tomorrow.” Her heart raced. She knew splits change things, but she wasn’t sure how — especially when the face value of the share would change…
Once upon a downturn, imagine you bought shares of a well-known company for ₹700 because your analysis suggested their true value was ₹1,000. Two months later, a shock—say, a sudden regulatory change or supply-chain disruption—sends the stock tumbling to ₹600. You survive the fall, breathe, and later exits at ₹950. If instead you’d bought at…
Bonus Issues have always been a fascinating event in the stock market. Imagine this: You bought 100 shares of a company a few years ago at ₹200 each. The company has now grown, and as a reward, it declares a 1:1 bonus issue. Overnight, you find 200 shares in your account. At first, it may…
Balance Sheet reading is often compared to unlocking a treasure chest of financial secrets. Imagine walking into an auction where two companies are up for bidding. Both look attractive on the surface—glossy presentations, strong sales pitches, and exciting growth narratives. Yet, one company is carrying a mountain of debt hidden under its rug, while the…
Intrinsic Value is like the hidden story of an asset, often invisible to the untrained eye but waiting to be uncovered. Imagine standing in front of an old, worn-out book at a flea market. To many, it’s just another dusty object, but a collector sees beyond its faded cover—the rare first edition, the timeless words…
It was 2008, and Rajesh, a young investor, was excited about the booming stock market. He bought shares in a company with a low Price-to-Earnings (P/E) ratio, believing it was undervalued. A year later, the stock collapsed because the company’s earnings growth had stalled. Rajesh had missed a crucial factor: growth. If he had used…
It all started when a friend of mine, a conservative investor, told me he never worried about the stock market’s ups and downs because his investments paid him every quarter like clockwork. Curious, I dug deeper into his strategy and discovered the true secret behind his confidence: dividend yield. For readers who want to know…
Fundamental analysis is a powerful tool used by investors to evaluate a stock’s true worth based on its financial health, business performance, and economic environment. By examining key metrics like earnings, revenue, debt levels, and valuation ratios, investors can make informed decisions about which stocks to buy, hold, or sell. This method focuses on long-term…
Free cash flow is one of the most important indicators of a company’s financial health. While earnings (or net profit) often grab the headlines, smart investors know that free cash flow tells the real story. Unlike earnings, which can be manipulated with accounting tricks, free cash flow shows how much actual cash a company has…
