The assessment of financial elements such as assets and businesses using intrinsic, economic, historical, or relational information.
Fundamental analysis (FA) is one of the most common analytical methods used in corporate finance to assess the value of financial elements and instruments. This analytical approach effectively allows the financial or market analyst to take the asset or business apart, so they can accurately determine its value. As such, the effectiveness of FA is dependent on the analyst's access to information about the intrinsic characteristics of the asset or business, as well as related economic or historical factors.
FA is very important in corporate finance. It is one of the principal justification for market analysis, price forecasting, and value determination.