Citation:

Owolabi, A., Ibukun – Falayi, Owoola Rekiat. "Ratio Analysis: A Technique for Investment Decision on Deposit Money Bank in Nigeria" International Research Journal of Economics and Management Studies, Vol. 2, No. 4, pp. 464-478, 2023.

Abstract:

This paper investigated the relationship between ratio analysis and investment decision-making in deposit money banks (a case study of First Bank of Nigeria Limited). The paper used secondary data, which were sourced from secondary sources. The variables on which data are collected include liquidity ratios, profitability ratios, debt to equity ratios. The scope of the paper covers the period from 2011 to 2021 and was sourced from an annual account and report of First Bank of Nigeria Limited. Data are analyzed using ordinary least square regression. Findings revealed that liquidity ratios, profitability ratios and debt-to-equity ratios have an inverse relationship with investment decisions in deposit money banks in Nigeria. The paper recommended that Deposit money banks should invest less in businesses that are highly geared since this portends negativity for their investment choices outcome; deposit money banks should balance the liquidity position of their investment proposal with profitability and ensure that just optimal liquidity position that does not hamper profitability is maintained and Portability ratio was positively related to investment decision; thus, DMBS should consider this ratio topmost in the analysis of their proposed investment projects to be properly guided in selecting a most profitable investment that minimizes risks.

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Keywords:

Deposit Money Bank, Investment, Investment Decision and Ratio Analysis.