The Relative Importance of Financial Ratios in Making Investment and Credit Decisions in Jordan

Abstract

This study has aimed to demonstrate the relative importance of financial analysis using ratios for each of lenders and investors in Jordan when making decision.Also; this study, included the financial ratios that could be adopted by decision makers in the industry (area) of lending or investment. The study included two categories; first is the category of financial intermediaries; to express the category of investors in Amman stock exchange (ASE), while the second category included employees of credit departments -in Jordanian banks- for the category of lenders.The collection of study data was based on a review of the subject's scientific literature, previous studies and by preparing a questionnaire that was designed on the basis of the theoretical framework of the study and its hypotheses.The objectives of financial analysis are to judge the efficiency of management and to use the information available to make various administrative decisions. The study found that financial ratios are used by data users when making decisions related to investment and lending. The results of the study also revealed the interest of lenders in debt and liquidity ratios, while investors' attention is focused on profitability and market ratios.

Ratio analysis for decision making, a study

“…There is a close association between the degree of reciprocity on financial ratios and efficiency of professional performance of financial analysts and the degree of relativity on them in making core idea (Alqam, et al,2021). The study prescribes the desideratum to highlight on the application of financial ratios pursuant to companies performance to devitalize credit risks and cinch strength to dodge their defaulting .…”

“…Firm would be perspicacious to eye the trend of ID and its deviations be rigorously studied. Table 1 and Figure 3 portray that ID decreases in every year except in 2020-2021. ID is 224 days, 190 days, 178 days, 215 days, and 213 days in 2017-2020, 2020-2021and 2021-2022 .35.57, Rs.90.41, Rs.…”

“…Table 1 and Figure 3 portray that ID decreases in every year except in 2020-2021. ID is 224 days, 190 days, 178 days, 215 days, and 213 days in 2017-2020, 2020-2021and 2021-2022 .35.57, Rs.90.41, Rs. 57.11, Rs.145.00 and Rs.270.33 in 2017-2020, 2020-2021and 2021-2022 x) Dividend Per Share (DPS): DPS shows the amount of dividend paid to ordinary shareholders on per share basis.…”

“…ID is 224 days, 190 days, 178 days, 215 days, and 213 days in 2017-2020, 2020-2021and 2021-2022 .35.57, Rs.90.41, Rs. 57.11, Rs.145.00 and Rs.270.33 in 2017-2020, 2020-2021and 2021-2022 x) Dividend Per Share (DPS): DPS shows the amount of dividend paid to ordinary shareholders on per share basis. Table 1 and Figure xi) Assets Turnover (ATR): ATR relates to the relationship between the sales and assets of an enterprise.…”

Factors influencing financial performance in South Africa’s food and beverage industry: An empirical analysis

“…There are various measures of financial performance employed by firms, but the most common measures of financial performance are financial ratios. Financial ratios provide information about a company's performance and can also be used to forecast a company's future performance (Alqam, Ali and Hamshari, 2021). One significant advantage of financial ratios is their ability to link various financial statements together.…”