Stock analysis is a method for investors and traders to
make buying and selling decisions. By studying and evaluating
past and current data, investors and traders attempt to gain an
edge in the markets by making informed decisions.There are two
basic types of stock analysis: fundamental analysis and technical
analysis.
Fundamental analysis concentrates on data from sources,
including financial records, economic reports, company assets,
and market share. To conduct fundamental analysis on a public
company or sector, investors and analysts typically analyze the
metrics on a company's financial statements - balance sheet,
income statement, cash flow statement, and footnotes. When
running stock analysis on a company's financial statements, an
analyst will usually be checking for the measure of a company's
profitability, liquidity, solvency, efficiency, growth
trajectory, and leverage. Different ratios can be used to
determine how healthy a company is.
The second method of stock analysis is technical analysis.
Technical analysis focuses on the study of past market action to
predict future price movement. Technical analysts analyze the
financial market as a whole and are primarily concerned with
price and volume, as well as the demand and supply factors that
move the market. Charts are a key tool for technical analysts as
they show a graphical illustration of a stock's trend within a
stated time period.
A mutual fund is a professionally managed investment fund
that pools money from many investors to purchase securities.
These investors may be retail or institutional in nature. Mutual
funds have advantages and disadvantages compared to direct
investing in individual securities. The primary advantages of
mutual funds are that they provide economies of scale, a higher
level of diversification, they provide liquidity, and they are
managed by professional investors.
A financial plan may contain prospective financial
statements, which are similar, but different, than a budget.
Financial plans are the ENTIRE financial accounting overview of a
company. Complete financial plans contain all periods and
transaction types. It's a combination of the financial statements
which independently only reflect a past, present, or future state
of the company. Financial plans are the collection of the
historical, present, and future financial statements;
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