BEGINNER'S TRADING EDUCATION: Learn with Angel (part 1Bi)
As I said earlier, Fundamental analysis is a method of evaluating the intrinsic value of an asset by examining its underlying economic and financial factors.
Here are some basic concepts to understand when it comes to FA
Economic factors
This can have a major impact on a company's performance. For example, a company that relies on consumer spending may be affected by changes in unemployment or disposable income. Investors can use economic indicators, such as GDP, inflation, and employment data, to get a sense of the overall health of the economy.
Financial statement
It provide information about a company's financial position, including its assets, liabilities, revenues, and expenses. The balance sheet shows a company's assets and liabilities at a specific point in time, while the income statement shows a company's revenues and expenses over a period of time, such as a quarter or a year. The cash flow statement shows the inflow and outflow of cash for a company.
Earnings
Earnings, or net income, is a measure of a company's profitability. It is calculated by subtracting a company's expenses from its revenues. Earnings are important because they can impact a company's stock price and dividends. For example, if a company's earnings are higher than expected, its stock price may increase.
Valuation ratios
These are used to compare a company's stock price to its earnings or other financial metrics. The price-to-earnings (P/E) ratio is a common valuation ratio that compares a company's stock price to its earnings per share (EPS). A high P/E ratio may indicate that a company's stock is overvalued, while a low P/E ratio may indicate that it is undervalued. Other common valuation ratios include the price-to-book (P/B) ratio, which compares a company's stock price to its book value, and the price-to-sales (P/S) ratio, which compares a company's stock price to its sales per share. All these also affect crypto market most time.
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