What are the types of fundamental analysis?
The types of fundamental analysis are divided into two separate categories: qualitative and quantitative. Qualitative fundamental analysis is based on the quality of something such management, brand, products, financial performance, board etc. Qualitative analysis is a subjective opinion. For example, you feel the products of Bajaj Auto are better than those of TVS Motor Co. This is a qualitative opinion. Quantitative fundamental analysis adds numbers. The major source of quantitative data is extracted from the financial statements. It is not subjective. Both qualitative and quantitative fundamental analysis of a company are a must. You cannot do one at the expense of another.
The process of fundamental analysis can also be done in two different ways: top-down and bottom-up. Investors using a top-down fundamental analysis of a company start by looking at macroeconomic factors before working going into the individual stock. For instance, if they are looking at Maruti stock, they will look at automobiles and passenger car sector before going into the company specifics. However, bottom-up fundamental analysis is done by first looking at individual companies and then building a stock portfolio based on their specific advantages.
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