Study on Financial Ratio Analysis Used by Investors in Stock Market and Its Impact

Abstract

Objective: To analyse the demographic and investment patterns of the stock market investors, To understand which financial ratios impacted the investor returns.
 
 Method: The present study used descriptive statistics for understanding the investors. This was followed by applying the discriminant analysis using the tool Advanced Excel. Prepared the structured questionnaire and collected data from the stock market investors. Variables for the study are identified by reviewing the existing the literature. This study followed the descriptive methodology steps for findings and conclusion. Followed steps are literature review, questionnaire preparation, data collection, data cleaning, processing, analyzing them, and conclusion. This study limited to Telangana, India region.
 
 Results and Conclusion:The stock market has investors from all categories of people. Most of them are aged between 20 and 40. We see that having more disposable income is increasing the chances of investing in stock market. As less income people struggle to satisfy their basic needs and have less disposable income. It is observed that most of investors are investing in multiple stocks and not in one bucket. They are interested in diversifying the risks. While investing they are spending time to gather information from all resources. At the time of investment more emphasis is on Growth of company and EPS. Most of the investors not looking at the financial ratios before making decision of investment in stock market. Hence, there is further chance of study to understand why some of the investors not looking at the financial ratios and why taking decision based on different parameters and how they are getting benefited.
 
 Implications of research:Earlier research papers, and studies considered the technical ratio analysis to get the maximum profits, and did the sentiment analysis of the investors, but studies did not consider the opinion of the investors in terms of selection of ratios used for making the investment and get the maximum returns and which financial ratios actually impacted the returns of the investors in the stock market. So, it is the gap of the study.
 
 Originality/value:8%