This research aims at predicting the market risks which eventually help predicting risk within an investation and developing former research in identifying how company financial ratio influences market risk level.
This research involves six financial ratios influencing market risks. The financial ratios cover assets growth, financial leverage, operating leverage, liquidity, assets size, and Return on Equity (ROE). This research employs the company consumatory goods financial data during June 1999 ? June 2004 on 27 companies listed at the Jakarta Stock Exchange. The data then was analyzed using multiple regression (cross section technique). The T-test and F-test are used to test the research hypotheses.
The result showed that only liquidity variable significantly influenced market risks while the others influenced insignificantly the market risks. As a whole, the six variables significantly predicted the market risk changes for about 62.2%
This research also revealed the financial report would be able to predict the reliability of the stock risk. The finance ratio combined by technical analysis directly the changed the risk level in the future. |