Definition

A method of analysis based on the company's fundamentals and the economy. This technique focuses on the company's financial ratios, company policies, economic conditions, and other factors that indirectly affect the company's performance. This fundamental analysis is considered by some experts to be more appropriate for long-term investments.

It is divided into three stages of analysis: economic analysis; industry analysis; and company analysis. For example, when an economic crisis occurs in another part of the world, the country has to cut their manufacturing costs. Since companies that do business in manufacturing usually import coal from Indonesia as fuel, reducing their production, they also reduce their coal supplies. This leads to a decrease in the export destination of coal-producing companies in Indonesia, and its stock price also decreases.