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Fundamental Analysis

Fundamental analysis supports investors to identify the fair value of a share. This value can then be compared to the actual stock market price of a share and will then lead into the valuation weather a share is over- or undervalued. 

[Translate to English:] Fundamentalanalyse

Annual Reports

The fundamental data of one company can be obtained from the annual reports and balance sheets. Finanzoo.de is doing this job for you and additionally also compares the results to companies worldwide. In order to make data comparable finanzoo.de calculates the Fscores. The FScore contains all relevant data in one key performance figure. 
The ultimate goal of using the FScore is to provide a reliable performance figure that can be used to outperform benchmarks. 
The most important key performance figures are the following:

[Translate to English:] cash flow

Price-Cashflow Ratio (P/C Ratio)

In the past mainly the Price-Earnings Ratio (P/E Ratio) was used in order to judge wether a share was over- or undervalued.  However, recently the Price-Earning Ratio has lost its prime position due to some bad events of "balance sheet cosmetics". Consequently cashflow statements gained ground as they are much more difficult to manipulate. 
Cashflow statements show information regarding financial transactions of one company during a certain period of time. The Price-Cashflow Ratio (P/C Ratio) allows investors to judge how share prices stand compared to the cash situation of one company. Ultimately investors can evaluate the development of the earning power of the analyzed company. 
The simplest way of calculating the Price-Cashflow Ratio is to divide the actual stock market price of a share by the operating cashflow. 

[Translate to English:] dividende

Dividends

Dividends are payments to the owners of one company. Value oriented investors are keen to have a continuous payment of dividends. At the same time they are interested in steady increases of the dividends. 

[Translate to English:] Gesamtkapitalrendite

Return on Investment (ROI)

The Return on Investment (ROI) is a key performance figure to evaluate the profitability of one company. It tells investors how one company is using its capital in order to make profits. The Return on Investment (ROI) is being calculated by summing up the annual net profits and the interests in borrowings and by then dividing this sum with the sum of the total capital. 

[Translate to English:] Eigenkapitalquote

Equity Ratio (E/R)

The Equity Ratio shows the equity in relation to the total capital. By looking at this key performance figure investors can evaluate the financial power and the dependency of outside capital of one company. The higher the Equity Ratio, the higher the financial stability and therefore the independence from outside capital.  

[Translate to English:] Kurs-Gewinn-Verhältnis

Price-Earnings Ratio (P/E Ratio)

The most popular key performance figure for fundamental analysts is the Price-Earnings Ratio. There are numerous calculation methods depending on the date or period that is being used for the calculation. 

[Translate to English:] Kurs-Umsatz-Verhältnis

Price-to-Sales Ratio (P/S Ratio)

If one company generates losses, looking at the price-earnings ratio does not deliver any reasonable results. Therefore, in such cases the fundamental analysis will use the Price-to-Sales Ratio instead. Also in this case one company is considered undervalued if the Price-to-Sales Ratio is low compared to other companies in the same peer group. 

[Translate to English:] Kurs-Buchwert-Verhältnis

Price-to-Book Ratio (P/B Ratio)

The classical balance sheet analysis states that one share is considered as undervalued the smaller the Price-to-Book Ratio is. It also says that the fair value of one share matches the book value. The Price-to-Book Ratio is being calculated by dividing the actual share price by the book value of one company. 

Evaluation of Key Performance Figures = FScore

Finanzoo.de evaluates the single key performance figures by using its own algorithm which additionally includes the results of empiric studies. The weighting is the following: P/C Ratio, Dividends, ROI, Equity Ratio, P/E Ratio and P/B Ratio. The combination of these key performance figures results into the FScore.