An assessment of financial ratios as predictors of casino stocks\u27 behavior

The purpose of this research is to assess the effectiveness of financial ratios as predictors of casino stocks\u27 performance. The financial ratios used in this study were EBITDA/sales, adjusted EBITDA/shares, asset turnover ratio, current ratio, and debt/equity ratio. A regression analysis tested the correlation between the percentage changes in the financial ratios and the percentage change in the E/P ratio. In addition, a regression analysis tested the correlation between the percentage changes in financial ratios and the percentage change in the market capitalization of the companies in the sample. The statistical test used was a multiple regression analysis; The findings indicate a positive relationship between the percentage change in the E/P ratio and the percentage change in two ratios: the debt equity ratio and the current ratio for small capitalization casino stocks. In addition, the study suggests that there is a positive relationship between the current ratio and the P/E ratio for medium capitalization casino stocks