The company analysis is the last part of the fundamental analysis using a top down approach. After the industry has been selected, it is necessary to analyze the companies in the industry to understand where the investor is most likely to make a profit. The company analysis begins with a short list of all the probable companies which seem the most suited in which to make an investment. The companies are shortlisted by looking briefly at particulars such as prices and the general information and rumours surrounding the companies.
After the preparation of the short list, the resulting companies are analyzed. The analysis focuses on the Business Plan and the strategies that the companies are pursuing. The strategic direction and the competitive position are analyzed here. The next step is to analyze the management people in the companies. By looking at the past records of managers and the management team as a whole, a general idea is developed about the prospects of the company. This is because high quality managers can provide success even in flailing industries, whereas incapable management can mess up even in flourishing scenarios.