Fundamental Analysis – Economic, Industrial & Company Factors

Fundamental Analysis – Economic, Industrial & Company Factors

An investor conducts fundamental analysis and technical analysis to predict the future price movements of securities by analyzing the Economic factors, Industrial factors and Company specific factors. 

Various economic, industrial and company specific factors can have a direct bearing on prices of securities. A fundamental analysis helps an investor to understand the general behaviour of the market, industry or a company and prepare a buying and selling strategy. 

Also Read: Technical Analysis – Dow Theory

Various factors studied under Fundamental Analysis

Fundamental Analysis factors

Economic AnalysisIndustrial AnalysisCompany Analysis
GDP of the countryGrowth rate of IndustryCompetitive Advantage
Level of Savings & InvestmentNature of ProductMarket Share
Inflation RateNature of CompetitionGrowth Rate/Sales
Interest RateGovernment programs and projectsCorporate Image
Government BudgetSubsidies, incentives, concessions

 

Financial Leverage and Borrowing Capacity
Tax StructureTax frameworkPrevious track record
Balance of Payment SituationImport and export policies

 

Profits of the company
Infrastructural FacilitiesFinancing normsFinancial Stability & Performance
Demographic FactorsState of technologyFuture estimates of sales, profits
Climatic ConditionsIndustrial PoliciesManagement
State of EconomySocio-Demographic TrendsOperating Efficiency
Overall rate of growthSupply Sector 
Growth in Primary, Secondary and tertiary SectorsType of Industry – Growth, cyclical, defensive, cyclical growth 
Linkage with World EconomyIndustry Life cycle 
Economic ForecastsSWOT Analysis

Also Read: Technical Analysis – Dow Theory

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