Articles Published 20 July 2017

Financial Ratio Analysis: Decision Usefulness for Potential Shareholders' Benefit

Musa Usman Kabir
Tunku Puteri Intan Safinaz School of Accountancy, College of Business, Universiti Utara Malaysia, Sintok, Kedah, Malaysia
Norhani Aripin
Tunku Puteri Intan Safinaz School of Accountancy, College of Business, Universiti Utara Malaysia, Sintok, Kedah, Malaysia
Redhwan Ahmed Ali Al-Dhamari
Tunku Puteri Intan Safinaz School of Accountancy, College of Business, Universiti Utara Malaysia, Sintok, Kedah, Malaysia
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DOI 10.32890/jbma2017.7.2.8818 Cite this article
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Abstract

The certainty of the reliance on the use of financial ratio analysis in making investment decisions by potential investors still remained a mystery. This has to do with the choice of ratios to select when making investment decisions. Many shareholders in Nigeria are uneducated or illiterate, and due to their ignorance, they cannot use ratio analysis in evaluating firms for investment decisions. Thus, this paper explores the concept of financial ratio analysis in terms of the decision usefulness of financial ratios. The paper suggests that the relevant financial information needed for the purposes of making investment decision can be sourced through the use of financial ratio analysis. Therefore, management must ensure that disclosure of comprehensive financial ratios form part of financial statement prepared for the overall appraisal of firms.

Keywords
Financial ratio analysis decision usefulness shareholders firms

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How to Cite

Financial Ratio Analysis: Decision Usefulness for Potential Shareholders’ Benefit. (2017). Journal of Business Management and Accounting, 7(2), 51-59. https://doi.org/10.32890/jbma2017.7.2.8818

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DOI · 10.32890/jbma2017.7.2.8818
OpenAlex · W2921863231

References

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