Fundamental analysis is a study in which investors evaluate the intrinsic value of an financial security by analyzing the fundamental factors that could influence its price in the future.
The main purpose of fundamental analysis to to find out whether or not the price of a financial security is overvalued or undervalued.
Here is a list of information required to conduct funamdental analysis;
- financial statements such as income statement, balance sheet, cash flow and audit report,
- economic, social, and political forces that affect the supply and demand of the underlying security,
- industry’s current or future economic outlook
- economic trends and geopolitical events
- Political instability in its own country or other countries.
- Uncertainties in the financial market
- Monetary policies of the central bank and fiscal deficits