This is why stockbrokers profile every investor and update this regularly.
A investor’s response to a set of probing questions will always classify him either as risk averse or aggressive. Such classification will determine whether to invest more in equity or fixed income securities . Through the investment advisory services of sIt is necessary at this juncture to examine one of the tools that stockbrokers deploy to ascertain the financial health of a company before executing investors’ purchase or sale order. This is a risk aversion strategy.
Each user needs financial statement to achieve different objectives. Financial ratios are numerous. Some of the top ratios are Profit Margin, Price-to-Book Ratio, Earnings Per Share {EPS}, Price-To—Earnings Ratio {P/E}, Dividend Yield, Debt-to-Equity Ratio {D/E Ratio), Return On Equity and Current Ratio
Profit Margin: The ratio shows how a company’s profit compares to its revenue. It is expressed in percentage. There are two types of Profit Margin: Gross Profit Margin and Operating Profit Margin. The Gross Profit Margin uses revenue minus cost of revenue while the Operating Profit Margin uses the gross profit minus overhead items. A higher profit margin is indicative of a better way the company spends its income. But this ratio differs from one sector to the other.
Since there are many investment ratios, there is no one-size-fits all method of ratio analysis, implying that there is no common standard. Therefore, different meanings are assigned to the same thing and ratio analysis ignores qualitative factors among others.UNIZIK Senate meeting not for election of Acting VC – Ojukwu
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