Financial Analysis of Granite Construction Industry Plc Essay

Financial Analysis of Granite Construction Industry Plc - Essay Example(Penman, 2003). In addition, investors consult enthronisation analysts who provide an almost endless stream of information and recommendations to sort out. There are often claims that most shares are undervalued and vice versa. (Penman, 2003).This information at times becomes confusing leaving the investor with no clear version of what the true values of stocks should be. (Penman, 2003). Under such circumstances, the investor is forced to make the investment decision following his/her instinct or based on the information provided by the market. (Penman, 2003, Kaplan & Norton 1992, 1993). Investors who make the decision based on instinct are referred to as intuitive investors while those who make investment decisions based on capital market dexterity are referred to as passive investors. (Penman, 2003). Passive investors carry out their investment decisions based on the assurance that the market price is a f air price for the risk taken, that is, that market forces have driven the price to the appropriate point. (Penman, 2003).These investment mechanisms appear to be very simple, as they do not require a great deal effort. (Penman, 2003 pp 3). However, both investors run risks that are even more than the risks of the firms they are investing in since they can both devote too much or sell for less and as a result nurture a decrease in returns on their investments. (Penman, 2003). According to Penman (2003), the intuitive investor has the problem of the intuitive duo builder one may be pleased with ones intuition but, before building gets underway, it might pay to check that intuition against the calculations prescribed by modern engineering as not doing so, may exsert to disaster. (Penman, 2003 pp 3). The passive investor runs the risks of either paying too much or selling for less should stocks be mispriced. (Penman, 2003). Although economic and modern finance theory (Bodie et al, 2002 Penman, 2003) predict that capital markets are perfect it is good set to check before taking action. (Penman, 2003). Therefore, both the passive and intuitive investor run the risk of trading with soul who has done his homework well, that is, someone who has analysed the information thoroughly. (Penman, 2003). This study is aimed at carrying out financial analyses of Granite Construction Plcwith peculiar(a) focus on the liquidity, profitability and solvency ratio so as to gain a reasonable bum for providing recommendations to investors and suppliers on whether to invest or continue business for the caller-out, and finally see the various methods through which the company access the capital market.Having said this,