The "Report Card": Intro to Fundamental Analysis

The "Top Line" vs. The "Bottom Line"

When you look at a company's financial results (the Income Statement), there are two numbers everyone talks about:

• Revenue (The Top Line): This is the total amount of money a company collected from selling its products or services. If a pizza shop sells 1,000 pizzas at ₹500 each, their Revenue is ₹5,00,000.

• Net Profit (The Bottom Line): This is what is left after the company pays for flour, cheese, rent, staff salaries, electricity, and taxes.

The Mentor's Lesson: A company can have massive revenue but still be losing money if its costs are too high. Always look for a healthy "Bottom Line."

The Debt Check

Does the company owe a lot of money to banks?

• Small Debt can be like a student loan—it helps the company grow faster.

• Large Debt is like a maxed-out credit card. If the business has a bad month, the interest payments could crush them.

The "Moat" (Qualitative Analysis)

Not everything is about numbers. In the medieval days, a moat was a ditch filled with water that protected a castle. In investing, a Moat is a competitive advantage that protects a company from its rivals.

• Examples of Moats: A brand everyone loves, a secret patent, or being the only store in a 100-mile radius. If a company has no moat, competitors will eventually steal its profits.