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Fundamental Analysis is an equities security valuation metod which involves examining a company's financials and operations, especially revenue, earnings, sustainable growth, net assets, debt financing, management expertise/competence and products. In this article, I will introduce some important financial ratios that have helped me to identify companies that are worth buying:

Here are some strong Buy signals:
(1) Earnings-per-share (EPS)
If this Quarter's EPS grows at a rate of 25% or more (as compared to the same Quarter of the previous year), this indicates that the company is experiencing very healthy earnings;
(2) Return-on-Equity (ROE)
If this Quarter's ROE grow at a rate of 30% or more (as compared to the same Quarter of the previous year), this indicates the company is efficient in using its reinvested earnings;
(3) Price-to-Earnings ratio (PER)
On average, the current PER must be 15X or lesser (but this also depends on the industry that the company is in, so the average should be taken as a genral rule of thumb);
(4) Current Assets to Current Liabilities (CA:CL)
The CA:CL ratio must be greater than 2 to ensure that the company is more than able to meet its short term obligations;
(5) Net Asset Value (NAV)
If the NAV is greater than the current share price, this indicates that the stock is cheaper than the sum of its assets.

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