Introduction about Fundamental Statement Analysis:-
A Method of evaluating a
security that is use to measure its intrinsic value by examining related
economic, financial and other qualitative and quantitative factors. Fundamental
analysts attempt to study everything that can affect the security's value,
including macroeconomic factors (like the overall economy and industry
conditions) and company-specific factors (like financial condition).Fundamental
analysis is about using real data to evaluate a security's value.
Objective:-
To produce a value that an
investor can compare with the security's current price, with the aim of
figuring out what sort of position to take with that security.
(Underpriced = buy, overpriced = sell or
short).
Financial Statement Analysis:-
Financial Statements represent a formal record of
the financial activities of an entity. These are written reports that quantify
the financial strength, performance and liquidity of a company. Financial
Statements reflect the financial effects of business transactions and events on
the entity.
Basic Types:-
i.
Statement of financial position:-
(e.g.-Balance sheet)
ii.
Income statement :- (e.g.-profit
& loss statement)
iii.
Cash flow statement :- (The movement
in cash and bank balances over a period)
iv.
Statement of change in equity :- (e.g.-statement of retained earning)
Decision Criteria:-
|
Particular
|
Measurement
Criteria
|
Intel
corporation’s
Performance
|
|
Market cap.
|
Higher
|
168.88
Billions
|
|
Enterprise
value
|
Lower
|
164.46
Billions
|
|
Trailing
P/E Ratio
|
Higher
|
16.49
|
|
Forward
P/E Ratio
|
Higher
|
14.77
|
|
PEG
Ratio
|
>1
|
1.76
|
|
Price-sales
ratio
|
Lower-Undervaluation
Higher-
overvaluation
|
3.13
|
|
Price/
Book ratio
|
Higher
|
2.84
|
|
EV/EBITDA
Ratio
|
Lower-Undervaluation
|
3.05
|
|
Profit
Margin
|
Higher
|
19.11%
|
|
Operating
Margin
|
Higher
|
25.72%
|
|
Return
on assets
|
Higher
|
9.77%
|
|
Return
on Equity
|
Higher
|
18.22%
|
|
Diluted
EPS
|
Higher
|
2.02
|
|
Current
Ratio
|
>2
|
2.37:1
|
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