Company analysis is a procedure carried out by financial investors to analyze the current securities of the company, gathering information relating to the company s overall profile, services and products, and profitability. It is also known as fundamental analysis. Company analysis charts and various kinds of company analysis reports are available in the stock markets. These provide information on the company's financial performance, history, prospects for future growth, and other relevant data.
Fundamental company analysis involves reviewing balance sheet information, cash flow, profit and loss, debt and equity, etc. This kind of analysis involves more detailed information and tends to be more technical in nature. On the other hand, Swot analysis involves examining earnings per share (EPS) and other measures of an investor's sentiment about the company.
Fundamental analysis and Swot analysis are the two main methods of assessing and predicting the long-term profitability of a company. In fundamental analysis, investors look at companies in a holistic manner, looking at their overall financials as a whole. On the other hand, Swot analysis looks at companies in a more complex way. It looks at the company as a whole in relation to its industry. Fundamental analysis and Swot analysis are generally used together to predict profitability.
An essential part of the research:
Company analysis is an essential part of the research. By carrying out the company analysis, the investors can arrive at an accurate picture of the health and future profitability of the company. The analysis gives the exact picture of the financial condition of the company and the likelihood of the company to profit and stay in business in the long run. A thorough evaluation of the financial statements of the company would help the investors to make better decisions, for example in choosing the shares to invest in or purchase option stocks.
There are various ways to carry out the company analysis report. First of all, it can be carried out personally, i.e. by going through the annual reports of the company, the yearly and quarterly reports, the financial statements, and so on. But in case there are many shareholders in the company, it would be difficult to go through all the information manually. For this, investors can take the help of the industry analysis services that offer industry-specific assistance, to get through the analysis of the company.
Industry-specific industry analysis reports give the exact account of the financial performance of the companies of a particular industry. For example, if the business is related to Pharmaceuticals, then industry analysis reports on pharmaceuticals would be completely different from the ones related to communications or utilities. All the financial statements that are contained in the annual report of the company need to be scrutinized to find out whether there are any discrepancies or not. Every single piece of information included in the company analysis should be checked to ensure that it is correct. Even the slightest mistake in the financial statements can result in heavy losses for the investors.
The main reason why such reports are crucial:
The second main reason why such reports are crucial for the shareholders is that they play a major role in deciding whether to add their shares to the company. If the industry is growing and has potential in the future, then an increasing number of shareholders would be willing to buy more shares, which would result in an increased value of the equity. On the other hand, if the market is declining and the share value is declining, then fewer shareholders will be willing to buy into the business. Thus, in this case, the company analysis that is carried out on the company helps in determining the actual extent to which the market has fallen and helped the investors make a decision whether to add their shares to the business or not. The third reason why such reports are essential for the shareholders is that the market for the particular company usually fluctuates, and investors need to make a decision even if the market is going up or down.
The company analysis also provides the managers with the required information about the future prospects of the company, especially in the near future. Thus, a manager needs to do such analysis before making any major investment decision. It is essential that the investors do their own company analysis before buying or selling any asset so that they can have an idea about its worth. However, the process of affiliate management is very time-consuming, and thus most of the investors prefer to leave the task to a professional agency such as Swot Street Research, who can carry out such analysis on their behalf.