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|Title:||PERFORMANCE ANALYSIS AS A PREDICTOR OF INVESTMENT POTENTIAL: A STUDY OF SELECTED COMPANIES LISTED ON SECOND-TIER SECURITIES MARKET OF THE NIGERIAN STOCK EXCHANGE|
|Authors:||ARIBIDO, SAMSON OLUWATOYIN|
|Abstract:||An attempt was made in this study to evaluate investment viability of five Public Liability Companies listed on the Second-tier Securities Market of the Nigerian Stock Exchange. Previous works have shown that the choice of stocks or shares to invest could be made by reference to a number of vital earning and asset statistics (Odife, 1985). Eleven financial (including profitability, liquidity, leverage and activity) ratios derived from published financial statements were subjected to correlation and regression analyses. The result identifies relationships existing between the financial ratios and such investment indices as Earning per share, (EPS); Dividend Per Share, (DPS); Share Price, (SP); Pay-out Ratio (POR); Price-Earning Ratio, (PER); and Volume of Share transacted (VOT). The observed growth and relationship between financial ratios and the investment Criteria in Adswitch, Cutix Aluminium Extrusion, Newpak and Smurfit enterprises over 5 years (1991-1995) formed basis for forecasting investment potential inherent in the equities. Applying Trend-line Projection of Compounded Growth Rate forecasting techniques within certain theoretical assumptions, it was indicated that Adswitch and Aluminium Extrusion industries posit comparatively favourable investment potentials in terms of dividend payment and growth in earnings respectively. Although the study is limited by non-availability of all requisite data it unveils obscurity of investment potential inherent in some Second-tier Securities. The Study further present simple investment valuation method for investors and investment consultants who barely have access to published financial statement or lack capacity for rigorous analytical techniques.|
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