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Analysing Stocks for Investment

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  Essential Analysis for Smart Stock Investing Investing in stocks (also known as shares / equity) can be rewarding but it requires careful analysis to make informed decisions. Here's a streamlined guide to the key areas of analysis necessary for stock investment. Understanding the Basics Stocks represent ownership in a company, and shareholders benefit from capital appreciation and dividends. The stock market is influenced by various factors including economic conditions, market sentiment and company performance. Fundamental Analysis Evaluate a company's financial health and performance through key financial statements: Income Statement : Includes Revenues, Expenses and Net Income Balance Sheet : Includes Assets, Liabilities and Shareholders’ Equity Cash Flow Statement : Examines Liquidity and Financial Flexibility Key financial ratios to consider: Price-to-Earnings (P/E) Ratio : Indicates how much investors are willing to pay per rupee of earnings. Debt-to