Fundamentals - fundamentals of companies (Fundamentals (Qualitative…
- fundamentals of companies
Risk and money management
Fundamentals of companies
Fundamentals of stocks
Fundamentals of markets
Good companies attract good people. Bad companies attract bad people. Whether it is traders or investors.
We want to trade only along with good people and knowledgeable ones. not the bad blood.
We will learn analysing fundamentals of companies using some simple techniques, so that you do not need to consume time to analyse a company.
Fundamentals of companies can be analysed in two says. Qualitatively and quantitatively.
Qualitatively, a company can be analysed by observing and reading about its
. Here market refers to the sector or segment the company is operating in. For example, Britannia is in consumer goods sector.
The only best source for analysing a company qualitatively is the annual report.
You don't have to read the entire annual report. Only read the information on the company, its board and management and finally "management discussion and analysis".
Another good source to analyse a company, its management and its market is reading news.
Fundamentals - Qualitative analysis.
In qualitative analysis, we need hardcore numbers to trust what the company is saying in its annual report and the news.To test that we should learn understanding some numbers.
Any company is obligated to release its progress records of financial performance. If they do not give, the exchanges and SEBI will delist them. Even big companies like Maruti do give financial performance updates frequently. This is the source of our qualitative analysis.
We will read the financial reports in detail before going through some important numbers.
Every company has to release its financial performance through THREE important financial statements: (1) Profit and Loss statement; (2) Balance Sheet; (3) Cash flow statement.
A P&L statement comes four times in a year, that is every quarter. It is the most important statement for doing results trades (our SETUP 1). One each quarter, after the quarter is complete.
A Balance Sheet comes only two times in a year, that is every half year. One in October and One in April.
A cash flow statement comes only once in a year. But you need this only for long term investing. For trading, we may not need it.
: Take any two companies from Nifty 50 and read their annual reports. Find out the qualitative aspects that you think are good information for trading.