Theoretical aspects of fundamental analysis

Abstract

Present economic situation in the world, especially in the Europe does not allow investors to hope for expected return from conservative investment instruments - government securities, bonds or deposits. Therefore, such a situation in the market leads to choose riskier investments in shares of the company of both professional and nonprofessional investors. In order to reduce the investment risk and to increase the possible return, investors often rely on fundamental analysis. This analysis is the homework of the investor before making the investment portfolio: research of the country, industry branch, company. Therefore, in this article the proper application of fundamental analysis is reviewed, while maintaining the logical its sequence in order to evaluate the suitability of various financial measures to be included in investment portfolio.