Security analyst has taken some basic step to educe the risk .
1. Quality of Management:
Quality of the management help to achieve the company goal which help to get the better return and also help to increase the turnover of the company. In every company there is saturation point but the good management with new innovation are able to get the primary level again .
2. Overall growth prospect:
If you want to purchase any company shares than check the past performance of that company .
Its liquidity, financial result ,assets combination etc.
As I past performance is not always good to judge the future of any company but still it help to decide the primary level of investment.
3. Quality of Earning:
Quality of earning menace the financial result of the company from last few years ,also check the turnover ration which help to get the financial structure of the company.
4. Clear information of the corporate strategy:
This means to check the transparency of the company. If the company regularly provide the financial result ant the financial position information also provide the assets and debt information of the company which help to get the clear picture of that company it also help to make the right future prediction of that company. This help to get the information that where the fund investment and how much it invested.
5. Liquidity position:
Investment in the security is very risky so when anyone go for the investment in security market than its better to check the liquidity position of that company which help to get knowledge that if there is any financial problem arises than the investor get back there capital investment.
6. Position in the market place:
Market position help get the financial strength as well as the goodwill of th company ,Goodwill of the company some time major difference in the investment and the price of the security.
7. industry prospect:
Industry prospect means the growth strategy relation with the Govt and the society .Some time the Govt. promote some industry and on the other hand Govt. impose some extra duty on some other industry to reduce the import or to increase the export extra.
8. Relation with the investors.
Relation with the investors means the company provide all the material fact financial information in the regular interval to the investor .They paid the dividend and the interest as time period decided in the agreement and also company informed the investor the new business strategy which effect the earning of the investor.