PERFORMANCE ANALYSIS AS A PREDICTOR OF INVESTMENT POTENTIAL: A STUDY OF SELECTED COMPANIES LISTED ON SECOND-TIER SECURITIES MARKET OF THE NIGERIAN STOCK EXCHANGE
PERFORMANCE ANALYSIS AS A PREDICTOR OF INVESTMENT POTENTIAL: A STUDY OF SELECTED COMPANIES LISTED ON SECOND-TIER SECURITIES MARKET OF THE NIGERIAN STOCK EXCHANGE
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Date
1997-10
Authors
ARIBIDO, SAMSON OLUWATOYIN
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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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Keywords
PERFORMANCE, ANALYSIS, PREDICTOR, INVESTMENT, POTENTIAL:, STUDY, SELECTED, COMPANIES, LISTED, SECOND-TIER, SECURITIES, MARKET, NIGERIAN, STOCK, EXCHANGE