The role of the financial analysis of the financial information published in the financial statements for predicting stock prices

This study aims at identifying the dimensions of financial analysis, its characteristics and how to benefit from it in predicting stock prices through test a set of financial ratios and by forming a quantitative model that can depends on to forecast stock prices for each sector in the Palestinian securities exchange market, to help investors make proper decisions when they invest in the market. The ratios were analyzed using statistical technique known as multiple regressions to reach the best model for each segment of the market, which includes a range of financial ratios that can be used to predict the stock prices for companies and organizations in the Palestinian securities exchange market. The most effective ratio on the stock price for the insurance sector are the market value to book value ratio, the earnings per share(EPS) ratio and the book value per share ratio. Whereas, in banking sector, the results showed that the most effective ratio on the stock price for the sector are market value to book value ratio, the book value per share ratio and current ratio. And for the investment sector, the most effective ratio on the stock price for this sector are market value to book value ratio, the earnings per share(EPS) ratio, the return on equity ratio and book value per share ratio. Furthermore, the market value to book value ratio, the price to earnings ratio (P/E), the current liabilities to equity and the profit margin ratio are considered to be the most effective ratio on the stock price for the services sector. While the most effective ratio on the stock price for the manufacturing sector are market value to book value ratio and the book value per share ratio. This study concluded that it could rely on a set of financial ratios for each sector to predict the stock price, the study also recommended that the attention and caring when preparing the financial list must be increased, and to be prepared according to the international accounting standards, and that investors can rely on financial analysis of the lists when making financial investment decisions. Key Words: Financial analysis, stock prices, financial ratios. 2018, 82 Pages Science Code: 112203