Liquidity position
This ratio measures the ease with which an investor can convert an investment to cash without negatively impacting either capital or return. It is measured by dividing the holding in the portfolio in terms of units by the average turnover for the security during the preceding six months
Portfolio concentration
Funds that do not have an adequately diversified portfolio carry a higher risk than well-diversified schemes. This aspect is considered in this ratio and overexposure to any of sectors or companies is therefore penalized.
Fund size
This field takes in to account asset under management of fund. Smaller fund are considered to have disadvantage over large fund. This aspect is captured through this ratio.
Literature Review
This paper[1] uses innovative application of operation research technique data envelopment analysis for evaluating investment funds. This approach uses production possibility set and finds out form of return to scale. This paper attempts to solve two problems firstly how to combine risk and return and secondly how to treat negative risks. These problems are solved by identifying suitable sets of measures. It also addresses the problems of inadequate diversification and it is deals with using iterative approximation procedure. The paper also highlights relationships between diversification, stochastic dominance and coherent measures of risk. It takes monthly returns of 30 hedge funds and after running iterative procedure on data within this time period, it show cases a practical difference. Possible shortcomings and direction for future research is also briefly discussed.
[2]There are as many 6500 mutual funds available to investors. Investors pay a lot of attention to the ratings o...
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...ed in Arab stock for less than a year. Instability of GCC stock market is causing the poor performance of these funds. This paper also discusses the consistency of fund performance in Saudi Arabia, Asia and Europe. Considering last 3 years returns future outlook of Asian countries specifically India and china, newly emerging economies like Brazil, Russia are going to continue their current performance in near future.
[9]B.P.S. Murthi, Yoon K. Choi, Preyas Desai, “Efficiency of mutual funds and portfolio performance measurement: A non-parametric approach”, European Journal of Operational Research 98 (1997) 408-418
[10]Ioannis E.Tsolas, “Precious metal mutual fund performance appraisal using DEA modelling”, Elsevier 39(2014)54–60
[11]Bijan Roy and Saikat Sovan Deb, “The Conditional Performance of Indian Mutual Funds- An Empirical Study”, 2003, no.593723 and PP. 1-24
This ratio compares the net sales of an organization with regard to its fixed assets. It quantifies the company’s operating performance by indicating the ability the organization has to generate net sales from fixed assets such as: property, plant and equipment. The higher the ratio, the more capable an organization is at utilizing its fixed asset investments to generate sales. In comparison to the industry average of 12.1, Happy Hamburger falls short before the increases at 5.49, but comes a bit closer to the industry average after the increases and has a score of 10.99. With regard to industry average, this could be considered a weakness for Happy Hamburger.
...r investments that can support the other weight and balance their portfolio and therefore alleviate some of the risk they face.
Quick Ratio – Constant grow for the last three years. From 3.56 in 2001 to 3.76 in 2002 to 4.17 in 2003. The reason of grow is constant increase in Current Assets.
Over the previous five years, the return of the ProIndex fund have outperformed the S&P 500 index, as the 5-year-return is nearly 3 times than the benchmark and the annualised return is nearly 2 times than the benchmark. It means ProIndex fund has a significant increase in value within that period. However, the ProIndex Fund has a higher standard deviation which means it is more risk than the S&P 500 index. Especially for the annualised standard deviation, it is approximately 10% higher than the benchmark. The correlation coefficient between the ProIndex and benchmark is about 0.65 which means both two variables are positive changing consistently, but there are still some other factors which have impacts on the relationship between two variables as the correlation is less than 1. Furthermore, the higher beta, 1.0132, which is more than 1 and it may be one of the reasons for high risk as well since it is more sensitive to the market change. It means that the ProIndex fund would increase by 1.0132% if the market increased by 1%.
...To check how successful it has been, we calculate debtor collection period ratio. (Dyson, 2004) Fixed Asset turnover: In this ratio, we seek the amount of sales that can be generated (or the amount of fixed assets necessary to achieve a level of sales) from a given level of fixed assets. (Klein, 1998) Total asset turnover: This ratio determines that how efficiently a firm is utilizing its assets. If the asset turnover ratio is high, the firm is using its assets effectively in generating sales. If this ratio is low, the firm may not be using its assets efficiently and shall either increase sales or eliminate some of the existing assets. (Argenti, 2002) Solvency Ratio Gearing: Gearing reflects the relationship between a company’s equity capital (ordinary shares and reserves) and its other form of long-term funding (preference share, debenture, etc.) (Black, 2000)
Ratios analysis also makes possible comparison of the performance of different divisions of the firm. The ratios are helpful in deciding about their efficiency or otherwise in the past and likely performance in the future.
Ross, S.A., Westerfield, R.W., Jaffe, J. and Jordan, B.D., 2008. Modern Financial Management: International Student Edition. 8th Edition. New York: McGraw-Hill Companies.
i.e. a. Fama, Eugene F. “Market Efficiency, Long-Term Returns, and Behavioral Finance.” Journal of Financial Economics 49, no. 1 (September 2011). 3 (1998): 283–306. i.e. a. Daniel K., Hirshleifer D. & Subrahmanyam A. 1998. The.
William Sharpe, Gordon J. Alexander, Jeffrey W Bailey. Investments. Prentice Hall; 6 edition, October 20, 1998
Market efficiency signifies how “quickly and accurately” does relevant information have its effect on the asset prices. Depending upon the degree of efficiency of a market or a sector thereof, the return earned by an investor will vary from the normal return.
In the paper published by Xiong (2010), it is presented that a portfolio’s total return can be disintegrated into three components: the market return, the asset allocation policy return in excess of the market return, and the return from active portfolio management. The asset allocation policy return refers to the fixed asset allocati...
...a measure of economic risk). When multiple risky assets are held within a portfolio, it can be expected that some properties will increase in value while at the same time others will decrease in value. By holding risky assets in groups, some of the risk of each asset may be reduced or eliminated through the process of diversification.
Before beginning an analysis of a company it is necessary to have a complete set of financial statements, preferably for the pas few years so that historical trends can be obtained. Ratios are a way for anyone to get an idea of the financial performance of a company by using the information contained in the financial statements. Ratios are grouped into four basic categories, liquidity, activity, profitability, and financial leverage. This document will use a variety of these ratios to analyze the firm, Sample Company, as of December 31,2000.
...t Efficiency and Stock Market Predictability" [Online] Available On: http://www.e-m-h.org/Pesa03.pdf [Accessed On 5 december, 2011].
Using the Modern Portfolio Theory, overtime risk assets will provide a higher expected rate of return, as compensation to the investors for accepting a high risk. The high risk will eventually lower collecting asset classes to the portfolio, thus reducing the volatile risk, and increasing the expected rates of return. Furthermore the purpose of this theory is to develop the most optimal investments portfolio which would yield the highest rate of return while ascertaining the risk for the individual or corporate investor.