Fundamentals Fundamental Analysis Definition & Meaning | Fundamental Analysis | CSIMarket
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Fundamentals Fundamental Analysis

Fundamental Analysis

Fundamental analysis is a method used to evaluate the intrinsic value of an investment. It involves analyzing various economic, financial and qualitative factors related to a company or security to determine its true worth. The goal of this analysis is to determine whether the current market price of a security is overvalued or undervalued. Fundamental analysis is commonly used by investors, analysts and fund managers to make informed investment decisions.

The fundamentals of a company or security are the underlying factors that determine its intrinsic value. These can include macroeconomic factors such as interest rates, inflation, and GDP growth, as well as company-specific factors such as revenue growth, earnings per share (EPS), profit margins, and cash flow. Other qualitative factors such as management quality, competitiveness, and market share can also be considered in fundamental analysis.

The basic formula used in fundamental analysis is:

Intrinsic value = (Future Cash Flows) / (Discount Rate – Expected Growth Rate)

In this formula, the future cash flows represent the expected earnings of the company over a certain period of time. The discount rate is the rate of return required by investors, while the expected growth rate is the rate at which the company is expected to grow in the future.

Fundamental analysis is an important tool in the investment industry, as it provides a comprehensive understanding of the underlying factors that determine the value of a security or company. By evaluating the fundamentals of an investment, investors can make informed decisions about whether to buy, sell or hold a particular security.




More Glossary Terms Beginning with F
  • Factory Inventories
    inventories represent the value of the end-of-month stocks regardless of stage of fabrication (whether in the form of purchased materials and supplies, work in process, or finished goods). These inventories are valued at cost using any valuation method other than LIFO. Inventories associated with the non-manufacturing activities of your company are excluded.
    Economy Term Letter: F
  • Factory New Orders
    A new order is a communication of an intention to buy for immediate or future delivery. Orders data are not collected from industries that have mostly immediate deliveries.
    Economy Term Letter: F
  • Factory Shipments
    Manufacturers? shipments measure the dollar value of products sold by manufacturing establishments and are based on net selling values, f.o.b. (free on board) plant, after discounts and allowances are excluded. Freight charges and excise taxes are excluded. Where the products of an industry are customarily delivered to distributors or consumers by the manufacturing establishment (such as in certai
    Economy Term Letter: F
  • Factory Unfilled Orders
    Generally, unfilled orders at the end of an accounting period are equal to unfilled orders at the beginning of the period, plus new orders net of cancellations received during the period, less net sales. This includes orders that have not yet passed through the sales account and funded orders (or portions of orders) for which the value of work done has not been reported as sales.
    Economy Term Letter: F
  • Facultative Reinsurance
    The reinsurance of all or a portion of the insurance provided by a single policy. Each policy reinsured is separately negotiated.
    Insurance Term Letter: F
  • Fair Access to Insurance Requirements FAIR Plan
    The reinsurance of all or a portion of the insurance provided by a single policy. Each policy reinsured is separately negotiated.
    Insurance Term Letter: F
  • Fair Value
    The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
    Financial Term Letter: F
  • Fair Value Hedge
    A derivative instrument designated in a hedging relationship that mitigates exposure to changes in the fair value of a recognized asset or liability or a firm commitment.
    Financial Term Letter: F
  • Fannie Mae
    Federal National Mortgage Association
    Financial Term Letter: F
  • FASB
    Financial Accounting Standards Board.
    Financial Term Letter: F
  • Fast Track
    Fast track designation is granted to expedite the review process of applications for approval of new drugs intended to treat serious or life-threatening conditions where potential to address an unmet medical need is demonstrated.
    Health Care Term Letter: F
  • FDA Food and Drug Administration
    The Food and Drug Administration of the United States, which, among other functions, regulates medical devices and other therapeutic products used in the United States. The U.S. FDA ensures that medicines, medical devices, and radiation-emitting consumer products are safe and effective. Authorized by Congress to enforce the Federal Food, Drug, and Cosmetic Act and several other public health laws,
    Health Care Term Letter: F