You often hear news about Warren Buffett and stock analyses based on a fundamentalist’s perspective. But what really is it? How do stock market advisers determine which stocks to buy and sell? Whether you are preparing yourself to be an investor, a stock analyst, or someone who merely wants to understand how fundamental analysis works, this article provides you with the basic information that you need to know.
In stock investing, it is important to base your decisions on sound analysis of the company’s performance and growth prospects. This is not possible without going through the nitty-gritty of a company’s financial statement. For instance, you need to know if it is generating revenues from its core businesses operation or if it has enough cash to cover dividend payment since dividends are usually paid in cash. This is best analyzed by looking at cash flow statements. If you are wondering just how much profit a company has made in its income report over a period of time, you have to refer to its income statement.