What are Fundamentals?

Fundamentals are the financial characteristics of a company.  They refer to the amount of debt a business has, the level of profitability, the available cash on-hand, inventory and receivable turns, as well as return on equity, assets, and investment.  These characteristics are used in fundamental analysis to determine the suitability of a particular stock or bond for investment.  They provide a standard that can be used to compare two businesses in the same industry or sector.

If a company is going deeper into debt and making less money each year, the fundamentals are said to be deteriorating.