Portfolio Analysis

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Definition: Portfolio Analysis

Portfolio Analysis is the process of reviewing or assessing the elements of the entire portfolio of securities or products in a business. The review is done for careful analysis of risk and return. Portfolio Analysis conducted at regular intervals helps the investor to make changes in the portfolio allocation and change them according to the changing market and different circumstances. The analysis also helps in proper resource/asset allocation to different elements in the portfolio.

Some examples of Portfolios:

• Unilever: teas, spreads, ice-cream

• Gillete:shaving products, batteries

The advantages of portfolio analysis for any company are:

• Evaluation of the firm’s business by the top management

• It helps to assess the company’s attractiveness

• Raises issues related to cash flow availability

• It helps to assess the competitive strength of the company with respect to market share, contribution margin, product fit etc.

• Communication is facilitated

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