Finance

Vertical analysis is a technique used to express line items of financial statements in relation to a single item or base. For vertical analysis of income statement, revenue is considered as a base and for balance sheet, total assets is considered as a base.It's also referred as vertical common-size analysis of financial statements or common-size vertical analysis of … [Read more...] about What is common-size vertical analysis of financial statements

Horizontal analysis of financial statements is a technique used to evaluate trends and growth pattern of financial performance over time by comparing historical data such as line items and financial ratios over a number of accounting period.It's also referred to as trend analysis or time series analysis of financial statements.You can use horizontal analysis to … [Read more...] about How horizontal analysis of financial statements can help you in investing

It’s important to carefully research fundamentals of every company in which you are planning to invest or invested to know its true value. In this article we will be discussing how an investor can sense when a stock is overvalued or undervalued by using Price to earnings or P/E ratio. Before we start, let us understand the meaning of overvalued or undervalued.What is … [Read more...] about How to sense when stock is overvalued or undervalued by using P/E ratio

Margin of safety in investing is first introduced by Benjamin Graham and then followed by many value investors including Warren Buffet. As per margin of safety principle, value investor should purchase stocks when their market price is lower than their estimated intrinsic value. The difference between estimated intrinsic value of a stock and its current market price is known as … [Read more...] about What is margin of safety in investing – Explained with examples

Every stock has two prices: the intrinsic value and the market value. Value investing is an investment strategy in which investors buy stocks that is trading at a price lower than the estimated intrinsic value.Intrinsic value is known as the company's true worth. Whereas, market value is the price which other people are willing to pay for the asset at any given moment. You … [Read more...] about What is value investing in the stock market and how it works