CHAPTER 1
INTRODUCTION
1.1 Background
There are some ways to invest money which are investing in business, investing in real
estates, saving in the bank and investing in capital market. Investing in capital market
especially stocks market has become more popular in this age because it offers an
interesting return if it is invested correctly. However, many people think that stock
market is unpredictable and associates it with gambling. However, it is not a gamble
because unlike gambling that is based on pure luck, in investing people can weigh their
decision by analyzing the companies’ financial data, the industry condition, price
movement, inflation, etc. By doing so, investors could decide whether the price of the
stock is worth to buy or not.
The most important thing for investor is to know whether or not the stock is worth to
buy and when to buy it. One way to know whether the stock is worth to buy is by doing
financial statement analyses. Financial statement shows how well the performance and
how strong the financial condition of the company is. From analyzing the financial
statement, people can get some calculations that can be the based on buying or selling
the company’s stocks. The relationship between elements in financial statements can be
explained by ratios. Technical analysis could help investors to decide when to buy or sell
the stocks.
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