Fundamental Analysis to Stock Market
By considering and checking financial information of any company, you can predict the future growth and the stability of that certain company. The key information which needs to be surveyed under the financial analysis are the Balance Sheet, Cash flow statement, Future plans of the company, Income and expenditure statements and etc. By carefully examining these financial data, you should be able to identify whether the share price of the company is overvalued or undervalued. This way the investors can make a better investment decisions.
A proper fundamental analysis on the Stock Market will also allow the investors to compare and contrast the data of several companies within the same sector and to identify which companies are performing better than the others. The companies showing strong financial data will normally gain it’s market value over time and on the other hand, the companies showing poor financial performances might go down in their market value in long term. This will direct the investors to invest in profitable and growing portfolios rather than investing all over the place without a clue. While precise fundamental analysis reduces the risk associated with the investments, those who proceed on their gut feelings and rumors from peers will always end up with huge losses.
For the freshers who intend to enter the share market it is suggested to always enter with a solid fundamental analysis which will develop a clear understating on the basics of investing. Even if you are new to the market, conducting a fundamental analysis is not as hard as it appears. As long as you can read the figures and understand, you will be safe in the market. Another important aspect is that when you do your analysis it is important to consider at least five years of financial reports of a certain company to ascertain the exact investment conclusions.
If you are already or a potential investor of the Colombo Stock Exchange, there are several ways in which you can obtain information to conduct your own financial analysis. Normally the local companies registered with the CSE are mandated issue their annual, mid-year and quarterly financial reports to the public. Most of them publish their reports on their official company websites and on the CSE website as well making it the easiest way for you to obtain the financial information.
On the safe side of the game, if any of the listed companies of the CSE do not disclose the required financial statuses to the public, the Securities and Exchange Commission will take the necessary actions to delist such organizations. Therefore, most of the listed companies of CSE will update their financial report on time after being audited by the independent charted accountants. Every report will include an independent audit report by the auditors and it is important to carefully analyze this report as well.