Fundamental Analysis Flashcards
What is fundamental analysis?
Fundamental analysis is the evaluation of a security’s intrinsic value by examining related economic and financial factors.
True or False: Fundamental analysis focuses solely on historical price movements.
False
Fill in the blank: Fundamental analysis often involves analyzing a company’s ______, including its earnings, expenses, assets, and liabilities.
financial statements
What are the three main financial statements used in fundamental analysis?
The income statement, balance sheet, and cash flow statement.
Multiple Choice: Which of the following is NOT a component of fundamental analysis? A) Economic indicators B) Technical charts C) Industry analysis D) Company management
B) Technical charts
What is the purpose of analyzing economic indicators in fundamental analysis?
To understand the broader economic environment that can impact a company’s performance.
True or False: Fundamental analysis can be used to predict short-term price movements.
False
What does the P/E ratio stand for in fundamental analysis?
Price-to-Earnings ratio.
Fill in the blank: The ______ ratio is used to evaluate the valuation of a company’s stock relative to its earnings.
P/E
Multiple Choice: Which of the following factors is typically analyzed in fundamental analysis? A) Market sentiment B) Supply and demand C) Company earnings D) Stock price trends
C) Company earnings
What is the significance of the balance sheet in fundamental analysis?
It provides a snapshot of a company’s financial position at a specific point in time.
True or False: Cash flow statements are important for assessing a company’s liquidity and financial health.
True
What does EBITDA stand for?
Earnings Before Interest, Taxes, Depreciation, and Amortization.
Fill in the blank: The ______ approach to fundamental analysis focuses on macroeconomic factors.
top-down
Multiple Choice: Which of the following is a key element of qualitative analysis? A) Revenue growth B) Management quality C) Debt levels D) Dividend yield
B) Management quality
What is a dividend and why is it important in fundamental analysis?
A dividend is a payment made by a corporation to its shareholders, and it reflects the company’s profitability and financial health.
True or False: Fundamental analysts only consider numbers and ignore qualitative factors.
False
What does the term ‘intrinsic value’ refer to in fundamental analysis?
The perceived or calculated true value of a company based on its fundamentals.
Fill in the blank: Analyzing industry trends helps fundamental analysts to understand a company’s ______ in the market.
position
Multiple Choice: Which of the following is a common valuation method used in fundamental analysis? A) Moving averages B) Discounted cash flow C) Relative strength index D) Fibonacci retracement
B) Discounted cash flow
What role do interest rates play in fundamental analysis?
Interest rates affect the cost of borrowing and the overall economic environment, influencing company performance.
True or False: A higher P/E ratio generally indicates that investors expect higher growth in the future.
True
What is the primary goal of fundamental analysis?
To determine the fair value of a security and identify investment opportunities.
Fill in the blank: Fundamental analysis typically involves a thorough examination of a company’s ______ and ______.
financial health; market conditions
