Question

1. What is an example(s) of a graduate-level research question on the topic of finance? I would like it to be easy to find the data and find peer-reviewed professional research on the topic as well.

Answer 1

The ratios analysis can be performed to compare the performance of any selected company with its peer in the same industry by taking the financial data of latest year. Some examples of ratios and how it can be used to compare financial performance is given below:

• The debt to equity ratio is used by the companies to evaluate how much leverage the company is using. So if the company has the higher the debt to equity ratio then higher risk is involved and also shows the aggressiveness of company to grow faster by financing through debt.
• The times interest earned ratio helps to measure the number of times the company is capable to make its interest payments, company’s probability to make defaults and also useful to decide the various parameters for debt.
• The fixed assets turnover ratio indicates the amount of sales revenue which is generated by each dollar of the investment in the fixed assets. The fixed asset turnover ratio is the financial tool that indicates how good company is utilizing its assets to generate revenue.

There are various types of ratios like liquidity ratios, activity ratios, profitability ratios and solvency ratios. So for a good research it is required to evaluate the company’s financial performance from all the perspective. The data can be taken from the official company website under investor relation section or from any other similar site and download the 10K form.