An Examination Of Quarterly Financial Ratio Stability: Implications For Financial Decision Making

Abstract

This paper examines the underlying dimensions of financial ratios derived from quarterly and annual financial information. Forty-four ratios were factor analyzed to determine their underlying dimensions. The results indicate that 12 dimensions underlie ratios developed from both quarterly and annual financial information. This finding differs from the seven factors consistently described for annual financial ratios in prior research. Comparison of these results and their implications are presented.