Security Analysts' Views of the Financial Ratios of Manufacturers and Retailers
Keishiro Matsumoto, Melkote K. Shivaswamy, James P. Hoban · SSRN Electronic Journal · 1998
Studies of efficient behavior by expert security analysts show that these analysts develop checklists of ratios that they consider most useful for analyzing a firm in a specific industry. While many financial management and investments books have chapters that explore security analysis using financial ratios, most of these presentations do not discuss which ratios security analysts consider the most useful. Using responses from a survey of security analysts, this study investigates which financial ratios they use when examining firms. The study ranks the perceived usefulness of 63 ratios and 13 ratio groups for analyzing manufacturers or retailers. Then, it ranks the ratios based on their different usefulness for analyzing manufacturers and retailers. The findings of this study should be of interest to novice security analysts and textbook authors.