1. Introduction
It is known that financial ratios are the oldest simple and practical financial and planning analysis tool. They appeared in the mid of the nineteenth century, and it were always used by accountants and financial analysts. Financial ratios were used by internal and external financial data users for making their economic decisions; including investing, and performance evaluation decisions. Many financial and accounting models were developed during past decades. However, the financial ratios still kept its classical and fundamental power either as part of these financial and accounting models or as another important supportive analysis with it. Because of the proven power of the ratio analysis in the practical financial and planning analysis, this study will explore the effect and power for some key ratios (ROA, ROE and ROI) together and separately in explaining the share prices during the period between 2002 and 2007 for one of the most important sectors in Jordan, which is, the insurance sector, the sector which produces the highest income comparing to all other sectors in Jordan, in addition to the shortage of studies for this important sector in this area.
1. IntroductionIt is known that financial ratios are the oldest simple and practical financial and planning analysis tool. They appeared in the mid of the nineteenth century, and it were always used by accountants and financial analysts. Financial ratios were used by internal and external financial data users for making their economic decisions; including investing, and performance evaluation decisions. Many financial and accounting models were developed during past decades. However, the financial ratios still kept its classical and fundamental power either as part of these financial and accounting models or as another important supportive analysis with it. Because of the proven power of the ratio analysis in the practical financial and planning analysis, this study will explore the effect and power for some key ratios (ROA, ROE and ROI) together and separately in explaining the share prices during the period between 2002 and 2007 for one of the most important sectors in Jordan, which is, the insurance sector, the sector which produces the highest income comparing to all other sectors in Jordan, in addition to the shortage of studies for this important sector in this area.
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