The role of financial analysis ratio

The purpose of the book is to evaluate and compare the financial statements of different companies to rate their performances. The emphasis is to be able to choose among several companies the best one to invest in. The aim of the study is met by comparing the risk of different companies, their rate of return, future trends and their strengths and weaknesses. In the theoretical section of the book different factors affecting the capital market are discussed, with the focus being on the risks of an investment. Basic financial statements and ratios are discussed briefly. Next cross sectional and time series techniques to compare the financial statements and ratios are revealed. Most of the information from the theories is later on used in the empirical part of the book. In the empirical study, initially the financial statements of different companies are taken to compute the ratios, risk, average return, to make trends and common size statements. Then a quantitative interpretation of the risk and return charts, common size statements, trend statements is executed alongside the qualitative discussion of individual figures and tables.