- Date:17 Nov 2020
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Fundamental analysis and Technical analysis,Fundamental analysis Technical analysis. An approach by which the intrinsic Technical analysis is a security. value of a stock is derived from the analysis methodology for forecasting. firm s or economic fundamentals the direction of prices through the. study of past prices and volume,Premises of technical analysis. Charts factor in all market elements,Price movements form trends. History repeats itself,Factors which determine share prices. It is thought that share prices are determined by the following factors. Share price,Company expected to rise,earnings Interest rates.

Increase Fall,Company Interest rates,earnings Fall. Share price,forecasted to fall,What about the level of profits Firm trends. How much will a firm s results grow Industry trends. Economic environment economic trends,What about future interest rate forecasts. Investor circumstances,expectations,Top down approach. The relationship between the cycle of economic conditions interest rates and. business performance and promising sectors is as follows conceptual diagram. Long term interest rate,Economic conditions,industrial production.

Interest rate trends Interest rate falls Interest rate rises Interest rate falls Interest rate rises. Deteriorates Improves Deteriorates Improves Deteriorates. Primary Materials,Interest rate,Manufacturing,Interest rate. Sensitive to economic conditions Sensitive to economic conditions. Sensitive to interest rates Sensitive to economic conditions Defensive. Public utilities power gas etc etc Manufacturing industry automobiles Food and medicine. precision electrical machinery etc production etc,Primary materials industry steel chemicals etc. Bottom up approach, Bottom up approach changes in a firm s performance conceptual diagram. Incipient stage Growth stage Maturity,Aggregate output. Business cycle,High growth,but uncertain,Investment.

opportunity,Gross margin,Operating profit,How to look at financial statements. The basic financial statements for analyzing a firm s business results and financial. condition are the profit and loss statement and balance sheet. Profit and loss statement P L Balance sheet B S, Note The diagram is an outline Please see each firm s financial statements for details. Price earnings ratio P E, Earning per share EPS is current income divided by the total number of outstanding shares. Example Company A,100 million pesos, Current income 100 million pesos EPS pesos 100 pesos. Total no of outstanding shares 1 million 1 million shares. The ratio which compares this EPS to share price is called the price earnings ratio PER. It is an indicator which shows how many times higher the share price is to earnings per share. and a typical indicator when considering undervalue and overvalue. Example Company A,Share price 1 500,EPS 100 pesos pesos.

P E 15 times,Share price 1 500 pesos,EPS 100 pesos. Price to book value ratio PBR, Book value per share BPS is net assets divided by the total number of outstanding shares. Actually calculated using numbers derived from a detailed definition by Enforcement of the Companies Act. Example Company A,Net assets 1 billion pesos 1 billion pesos. BPS pesos 1 000 pesos, Total no of outstanding shares 1 million 1 million shares. The value which compares this number to share price is called the price to book value. ratio PBR A price to book value ratio under 1 means the share price is lower than the. dissolution value on the books,Example Company A,BPS 1 000 pesos share price 1 500 pesos.

PBR 1 5 times,Share price 1 500 pesos,BPS 1 000 pesos. Return on equity ROE,Earnings per share EPS Book value per share BPS. Current income divided by the total no of outstanding shares Net assets divided by the total no of outstanding. Actually calculated using numbers derived from a detailed definition by Enforcement of the Companies Act. Example Company A Example Company A, Current income 100 million pesos Net assets 1 billion pesos. Total no of outstanding shares 1 million Total no of outstanding shares 1 million. net assets,current income,1 billion pesos,100 million pesos. EPS pesos 100 pesos BPS pesos 1 000 pesos,total no of total no of.

outstanding shares outstanding shares,1 million shares 1 million shares. The value which compares this EPS earnings per share and BPS book value per share is called the rate. of return on equity ROE This uses shareholders equity to show how much a company has increased. earnings and a high ROE means that the company is being managed that much more efficiently. Dividend yield, The dividend yield or dividend price ratio of a share is the dividend per share divided by. the price per share It is also a company s total annual dividend payments divided by its. market capitalization assuming the number of shares is constant. Most Recent Full Year Dividend,Current Dividend Yield. Current Share Price,Example Company A, Annual dividends per share 30 pesos RECORD DATE date where stockholders to be. Share price 1 500 pesos entitled of dividends are identified and recorded. 30 pesos EX DATE three working days before the record. DIV X 100 date, 1 500 pesos PAYMENT DATE date where dividends will be.

finally paid to stockholders,Investment information. Investing in stocks is investing in information, Mainly conduct fundamental analysis of firms project the results of. 1 Analysts, individual firms and offer investment decisions ratings. Analyze what condition the economy is currently in and where it is. 2 Economists heading in the future, Develop and recommend investment strategies taking into. 3 Strategists consideration the investment environment around what markets. Fundamental Analysis This presentation is being issued solely for information purposes This presentation does not contain all of the information required by a party to evaluate the prospects of participating or utilizing the proposed financial products Potential participants must conduct their own investigations and analysis and rely on the results of such investigation in coming up with a

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