Mathematical Sciences: Faculty Publications
Ranking of Financial Ratios
Document Type
Article
Publication Date
12-2015
Publication Title
Journal of International Finance and Economics
DOI
10.18374/JIFE-15-4.6
ISSN
2378-864X
Abstract
Financial ratios have been used in various models to predict stock price since the 1960's (Altman, 1968). A few prominent models include the Piotroski score (Piotroski 2000), Fama-MacBeth regression (Fama & MacBeth, 1973), and the F-R model (Francis & Rowell,1978). Financial ratios used in these models vary from macroeconomic (for example, consumer inflation or the unemployment rate) to financial, such as the quick ratio. This paper is the first effort to rank these financial ratios. In this study, we apply a stepwise analysis of data from 2086 firms to show that out of 32 ratios, 6 ratios are most important for predicting firm performance.
Recommended Citation
Zhang, Aimao, Scott N. Kersey.
2015.
"Ranking of Financial Ratios."
Journal of International Finance and Economics, 15 (4): 67-72.
doi: 10.18374/JIFE-15-4.6
https://digitalcommons.georgiasouthern.edu/math-sci-facpubs/349
Copyright
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