Introduction to Fundamental Analysis http://www.arvind151.com/1259-2/ w w w. a r v i n d 1 5 1 . c o m (HTTP://WWW.ARVIND151.COM/) (http://www.arvind151.com/) Jhunjhunwala Stock Picks FUNDAMENTAL ANALYSIS (HTTP://WWW.ARVIND151.COM/CATEGORY/FUNDAMENTAL-ANALYSIS/) LEARNING (HTTP://WWW.ARVIND151.COM/CATEGORY/LEARNING/) Introduction to Fundamental Analysis arvind151 (http://www.arvind151.com/author/admin/) - February 7, 2017 (http://www.arvind151.com/1259-2/) 1 of 11 2/23/2017 12:50 PM Whatever things that put money in your pocket comes under an Asset whether it’s a renting house. what are its assets and liabilities. Question: What is CAGR? 2 of 11 2/23/2017 12:50 PM . In other words. For e. But if you put that same car on rent and it gives you some form of income then that car becomes an asset. then it’s your liability because it is not putting any money in your pocket.com/1259-2/ Fundamental analysis is the foundation of investing.g. then that house is an asset. your job etc. how much it is spending. your business.Introduction to Fundamental Analysis http://www.g. it’s extremely important for an investor to invest only in companies which have good sound fundamentals. Cash flow statement and how they all fit together. A company which is fundamentally sound with good management most often generate a lot of wealth for its investors. Question : What is a liability? Answer: A liability is something that takes money from your pocket. we can say that Fundamental Analysis is a tool to make quantitative analysis of every financial aspects of a company. Income Statement. In a very simple terms we can say that fundamental analysis is an ability to know the structure of a business that is how a business is performing. Important: The biggest mistake we make is that we think the house that we live in is an asset but it's not an asset rather it's a liability because it doesn't put any money in our pocket. if a house is giving rent. We can use results derived from fundamental analysis to gain insight of the future performance of the company. when you buy a car. In Indian stock market many fundamental sound companies have delivered a 20% or more Compounded Annual Growth Returns (CAGR) in last 10 to 12 years. your investments. Therefore. lets understand some financial terms in very simple language: Question : What is an Asset ? Answer : An Asset is something that puts money in your pocket. how much are the debts of the company etc. For e. Before we move further.arvind151. A major part of Fundamental Analysis will be spent learning about the Balance Sheet. what are its source of revenues. Doing the math. or 19.71). Next.71 ^ 0. Now to calculate the CAGR of your portfolio from the period from Jan 1. 2014 to Jan 1. you would raise the result to the power of 1 divided by the number of years (1 / 3 = 1/3 or 0. Sounds confusing. Important: Higher is the CAGR. 3 of 11 2/23/2017 12:50 PM . Suppose you bought 100 Shares of company XYZ at Rs.195 – 1 = 0.2017. Stock XYZ has given a CAGR of 19. 700/. don’t worry. 2017. you would divide the final value of your portfolio by the portfolio’s initial value (1.5 %.000 = 1.3333) – 1 = 1. 2014 and after 3 years Stock price of XYZ is at Rs. Therefore. higher are the returns.on Jan 1.000 / 70.20. It is the mean annual growth rate of an investment over a specified period of time longer than one year. Infosys : Infosys has given CAGR of approx.Introduction to Fundamental Analysis http://www.arvind151. 18% in last 15 years. you would subtract 1 from the resulting value. Let’s understand about CAGR with help of an example. 1200/-.com/1259-2/ Answer: CAGR stands for Compounded Annual Growth Returns.5% from Jan 1. Finally.3333). you would calculate: [(1.000 / 70. we will make it simpler.20. Portfolio of 15-20 Multibagger Let us look at the past 10-year performance of some fundamentally good companies and learn how much returns they have given to the investors: 1.000) ^ (1 / 3)] – 1 = (1.195.2014 to Jan 1. com/1259-2/ 2.Introduction to Fundamental Analysis http://www. Titan Company : Titan has given CAGR of approx. 4 of 11 2/23/2017 12:50 PM . Symphony Ltd. 3. : Symphony has given CAGR of 102% in last 10 years.arvind151. 49% in last 10 years. com/1259-2/ Now let’s also look at some companies who have degraded investor’s wealth and have given Negative CAGR : 1. Suzlon Energy : Suzlon Energy has given CAGR of -22% in last 10 years.arvind151. 5 of 11 2/23/2017 12:50 PM . JP Associates : JP Associates have given CAGR of -28% in last 10 years.Introduction to Fundamental Analysis http://www. 2. arvind151. This is where qualitative analysis comes in . We will learn about each and every aspect of Fundamental Analysis in detail in next posts.Introduction to Fundamental Analysis http://www. symphony etc. from above we can see that how important is to select a company which is fundamentally sound which can create wealth for investors. have created wealth for investors where as companies like JP Associates. In next post we will learn How to Read Annual Report of any Company in very simple language. difficult-to-measure aspects of a company. The major part of all the posts in this series will be dedicated in learning about the Balance Sheet. Portfolio of 15-20 Multibagger 6 of 11 2/23/2017 12:50 PM . have destroyed wealth of investors.com/1259-2/ From above examples. Income Statement. Therefore. But there is more than just number crunching when it comes to analysing a company. Cash Flow Statement and how they all fit together when we do fundamental analysis of a company. we see how companies like Infosys.the breakdown of all the intangible. titan. Suzlon Energy etc.