Investments

Fundamental Analysis: uses intrinsic value when evaluating and evaluating a company's worth and potential to 

grow 

Intrinsic Value: a measure of an asset’s ( company’s) worth


Fundamental Analysis is the process of examining a company’s financial statements.


The Three Main Financial Statements are: 

Balance Sheets

Income Statements 

Cash Flow Statements 


  1. Balance Sheets: 3 parts

Assets of the company: Cash, real estate, equipment, inventory

Liabilities of the company:  debt, accounts payable

Owners Equity/capital: $ that a company raises in an IPO or FPO

Balance sheet: Assets = Liabilities + Owner’s Equity 


  1.  Income Statement : 2 parts


Revenues - What the company earns from selling a product or service 

Expenses -  Operations costs, taxes, loan payments 

Earnings or Net Income = Revenues - Expenses 

A company’s net Income can be used in 2 ways: 

A company can Reinvest or dividends with Earnings or Net Income


  1.  Cash Flow Statement: 

 Is a company’s budget, it tells you how the company is spending its money


Market Capitalization:

Def: Total value of a company’s shares in the market

Market Capitalization= Price per share X Outstanding shares 

Large-Cap:  $10 billion plus

Mid-Cap: $2 billion - $10 billion 

Small -Cap: $3 million - $2 billion  




Ratios - Price to Earnings Ratio or P/E Ratio: 

Current ratio- measures how much money a company has available once its current liabilities are subtracted from current assets 

  • A ratio of 1.5x or 2.0x is considered good

Debt/equity ratio- measures how much debt (loans) a company has as compared to…

Book value- measures how much money would be left if all assets were liquidated and all liabilities paid. 

Investors look at BVPS- book value per share to determine if a company is over or undervalued- when comparing it to its stock price 



  • If employer does not provide 401k you can open an IRA account

  • Trading on margin is borrowing money to buy stock

    • If stock does not go well you will have to pay interest

  • Debit acc/checking acc is an acct for transactions

    • Paying bills from it/write a check

  • Savings acct. Provides interest 

    • If withdrawing more than 5 times a month fee will have to be paid

  • Certificate of Deposit is when u put money into the bank for a specific amount of years and they give you better interest on it