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

Mohammad Ahmad Alqam, Haitham Yousef Ali and Yaser Mohd Hamshari

International Journal of Financial Research, 2021, vol. 12, issue 2, 284-293

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.

Keywords: financial ratios; investment decisions; credit decisions (search for similar items in EconPapers)
Date: 2021
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DOI: 10.5430/ijfr.v12n2p284

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Handle: RePEc:jfr:ijfr11:v:12:y:2021:i:2:p:284-293