| dc.description.abstract | Financial ratios are most frequently and widely used in practice
to assess a firm's financial performance and condition. Over
past several years, researchers have, however, subjected
financial ratios to empirical analysis to find their other uses.
The research focus in empirical studies has been mostly on
ascertaining the predictive power of financial ratios. The
predictive power of financial ratios has been investigated in the
following areas: (a) corporate bankruptcy/sickness by Altman
(1968, 1984), Beaver (1966), Blum (1974), Lincoln (1984), Ohlson
(1980) and Wilcox (1973) in the U.S.A., and Gupta (1983), Kaveri
(1980) and Yadav (1986) in India; (b) bond ratings by Horrigan
(1966), Pinches and Mingo (1973), and Pogue and Soldofsky (1969);
(c) acquisition/merger targets by Dietrich and Sorensen (1984),
Rege (1984), Simkowitz and Monroe (1971), and Stevens (1973); and
(d) relationship of financial ratios to industry targets by
Frecka and Lee (1983) and Lev (1969). In these and other related
studies a large number of ratios have been reported as important. | |
