A Fundamental Research on Stock Market Analysis

A Fundamental Research on Stock Market Analysis

A stock market analysis is the research work carried out to know a few facts regarding the performance of the businesses and also to know about the value of the firm.  The value of the firm depends upon the market value and the cost of equity which helps to determine the earnings after all deductions available to the shareholders who are invested for the better performance of the firm.  The shareholders’ investment is the sources of funds available for the firm owner to establish his business as well as to run the business in a successful way.  Though there are many ways to raise the funds either through the long-term or short-term funds, many people want to play the business games in a better way by reducing much risk involved in the arrangement of funds.

In the viewpoint of shareholders, they need to get a return on investment with a better profit margin so that they feel happy and very much interested to continue in these business firms in a long run.  Though there are many platforms and options available for the shareholders to invest their hard earned money like Bitcoin trader and some other cryptocurrencies online trading platforms, the shareholder’s feel stock market trading, and investment is the better and valid platform to invest, since they may feel is it a safe way to invest in them.

Generally, the shareholder does some fundamental research before investing in the company by analyzing the key ratios involved in the financial performance of the firm.  A fundamental research involves the study of the financial statements of the firm to gain knowledge of the factors involved in the business operations to run it in a smooth and efficient way.

Let us discuss some key indicators considered in the fundamental research of stock market analysis.  They are as follows;

  • Debt-equity ratio: It is the proportion of the assets used to do business operations and also how much funds have been employed to raise the funds.  This ratio helps to find the assets which have been employed for the betterment option of raising funds.  It also helps to study the present and past performance of the firm.
  • Earnings per share: It is nothing but the earnings per share after all the deductions like paying out the interest and taxes.  The earnings after all these deductions per share will help to determine the growth of the firm.
  • Return on equity: The return on equity helps to know the earnings made by the firm to settle the amount to the shareholders.  It gives a picture of the company performance is efficient or not.
  • Price to earnings ratio: It is the ratio between the market value of the share and the earnings per share.