The Fundamentals of business
Analysts are always talking about business fundamentals. Often, it may be difficult to understand exactly what they mean. Here, we try to explain.
The Cash Stash
Any successful business knows that a pile of cash is needed, which may be needed at anytime. Perhaps a wonderful acquisition comes up. Perhaps a very good contract, up for grabs, that requires the business to make an immediate upgrade in certain manufacturing or processing facilities. Microsoft knows it. They have a cash stash in the high end two figure billion, enough to buy over most large companies. Google knows it too, and they have built up and maintained it. Governments know it too, and maintain their reserves, whether in gold or foreign reserves, to protect themselves.
The business proper
The business itself. What does the company do ? What market share does the company have, and is there any competition, or any possible competition ? Are revenues stable ? If the track record good ? Are related industries booming or under threat ? If you can confidently answer these questions, and are convinced the business is sound and a good investment, we think so too.
The management
Has the management planned any long term strategic targets ? And what kind of manpower benefits do they have ? Remember, a happy workforce is a productive workforce. A pay pegged to productivity is always preferable to a fixed pay or one based on seniority.
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