| Fundamental Analysis is a business valuation process | | | | - Income Statement (revenue, expenses, net income, |
| based on the assessment of company financial | | | | earnings and dividends) |
| statements. Famous practitioners of fundamental | | | | - Balance Sheet (assets, liabilities and equity) |
| stock analysis include Warren Buffett, Benjamin | | | | - Cash Flow Statement (cash flows from operations, |
| Graham and Peter Lynch. | | | | investments and financial activities) |
| The principles of fundamental stock analysis are | | | | Fundamental Analysis Usage |
| widely publicized and two of the most widely | | | | Fundamental analysis is used to identify value |
| regarded stock investing books are: | | | | investment opportunities based on each company's |
| - Benjamin Graham's 'The Intelligent Investor' | | | | latest available financial results as well as historical |
| - Peter Lynch's 'One up on Wall Street' | | | | performance. Each company listed on a stock |
| Benjamin Graham was a mentor and major influence | | | | exchange must publicly release their financial results |
| on Warren Buffett who following the principles set | | | | (usually quarterly) which allows for a comparative |
| out by Graham, has become one of the most | | | | assessment to be made between companies over a |
| successful investors ever. | | | | range of fundamental analysis criteria. Performing |
| The track record of these fund managers speak for | | | | fundamental stock analysis allows you to statistically |
| themselves managing to achieve more than double | | | | rank each company's financial health to find stocks in |
| the average returns of the market average over | | | | the strongest financial positions through to the |
| decades. | | | | weakest. |
| Financial Statements | | | | Once you have found fundamentally strong |
| The three major financial statements used in a | | | | companies you can then look at the historical stock |
| fundamental stock analysis assessment consist of: | | | | price trends for entry points into the market. |