TABLE
OF CONTENTS
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE
STUDY
1.2 STATEMENT OF THE PROBLEM
1.3 OBJECTIVE OF THE STUDY
1.4 SIGNIFICATION OF THE
STUDY It enable
1.6
PLAN OF THE STUDY
1.7 DEFINATION OF TERMS
CHAPTER TWO
2.0
LITERATURE REVIEW
2.1 DEFINATION AND TYPES OF ACCOUNTING RATIO
2.2
ACCOUNTING RATIO
AS A TOOL
FOR FINANCIAL ANALYSIS
2.3
INTERPRETATION OF DEBT TO EQUITY RATIOS
2.4
USERS OF ACCOUNTING RATIO
REFERENCES
CHAPTER THREE
RESEARCH ETHODOLOGY
3.0
INTRODUCTION
3.1 SOURCES OF DATA AND DATA COLLECTION TECHNIQUES
3.2 METHODS OF DATA
ANALYSIS
3.3 PROFILE OF THE CASE
STUDY
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF DATA
4.0 INTRODUCTION
4.1 DATA PRESENTATION AND ANALYSIS
4.2 LIQUANTITY RATIO
4.3 LEVERAGE OF CAPITAL STRUCTURE RATIO
4.4 ACTIVITY RATIO
4.5
PROFITABILITY RATIO
CHAPTER FIVE
5.0
SUMMARY, CONCLUSION AND RECOMMENDATION
5.1
SUMMARY. .
5.2 CONCLUSION
5.3
RECOMMENDATION
APPENDIX (1)
BIBLIOGRAPHY
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Interpretation of account is the art and
science of translating the figures there in such a
way as to reveal financial strength and weakness of a business. Ratio analysis is a
powerful tool of accounting analysis.
A ratio
is defined as the indicated quotient of two mathematical expressions and the relationship between two or more
things.
In
accounting analysis a ratio is used as index or yardstick for evaluation the
financial position and performance of a firm or company. More so, ratio analysis involves comparing
none figure in terms or in relation to another
figure. It is computed by dividing one number that is the base into another. Ratio analysis facilitates the
evaluation of accounting information
by educing such data into smaller unit. One of the utility of accounting ratio as a tool of accounting analysis
to that not effected by the relatives
size of activities or department being compared thus it allows for comparison
between small and large firm with the same firm. Ratio analysis in addition of providing us the means by which we teot the
efficiency of various pleasures of the
business as prevented by the financial statement.
It
is also make it possible for management to compare the performance of a firm with those of other firms in the
same industry and/ with
the same organization. We can compare different department or the performance of the organization between years.
The performance on organization can be measured from the income statement and balance sheet.
Therefore,
this accounting ratio uses the financial data from balance sheet and income statement to evaluate the company
performance. The compilation
of trading profit and loss account: and balance sheet present and produce of
series of transaction, which we have taken place over a particular period of time. In order to make use of information presented in
the final, account and balance sheet the users need analysis and interpret the
meaning before making any conclusions.
The
first stage in analysis in the development of a systematic review if accounting data with the aid of accounting
ratio, which show the relationship of the
results of the firms activities.
The interpretation of
the final account and the balance sheet could thereafter
of being carried out using the accounting ratio so obtained from the result of the activities but before any
interpretation is undertaken the print
of view of the person requiring the information must be understood.
1.2 STATEMENT OF THE PROBLEM
In
business world today, the matter of mal-administration management in effectives and
wider-utilization of resources by management given the business owners no other option but komeasure
the through the usage of accounting ratio.
These ratio are adopted so as to improve the management performance efficiency.
The research, therefore seek
lo measure the management performance and efficiency in Texaco Nigeria Pic,
1.3 OBJECTIVE
OF THE STUDY
The use objective of the project r.ie to facilitate the ratio behind
various decisions that are taken in the
business organization on different situation at a point in term.
This research work will study the use of accounting ratio a
measure or organization performance and
efficiency. Stressing the reason why various business activities embark
upon business organization
have been so unicredilive for continues
existence of business.
1.4 SIGNIFICATION
OF THE STUDY
It enable interested parties to know how profitable a business
is. It help to ascertain the extent to which
a firm has used its long-term
Solvency
by borrowed found.
The ability of a firm
to meet its current obligation can be measured. The ratio is a means of
communicating or giving information to the public of what has happened from are
period to another.
1.5 SCOPE AND LIMITATION OF THE STUDY SCOPE
This
particular project will attempt to disclose and limit itself to uses of accounting ratio in the business organization with particular
reference to Texaco Nigeria P!c. '
It will also show how
important business decision are taken based on adequate business information that is readily available derived from accounting ratio analysis.
Furthermore,
this project will enumerate some of the reason why business activities or organization have been
is interesting to prospective investor
to subscribe for shares of the company.
It is
difficult to decide on the basis for comparison
Ratio
calculated over or at a point in term may less informative and defective as they suffer from short-term charge
Definition
of terms in the balance sheet and income statement different, interpretation of ratio of two companies or of
one company over years comparism
to rendered difficult.
1.6 PLAN OF THE STUDY
The research work has been
subdivided into five chapters.
Chapter one
contains the introduction of the whole topic and other chapters in this project work.
The
second chapter deals with various writers point of views, it also contains theoretical details, practical
illustrations and interpretations drawn out by the
researcher in the shream of this study.
Chapter three covers the
historical background and information of Global
soap and Detergent Company. In this chapter, data are specified, collected,
analyzed and interpreted.
The
method use for the data analysis and the company capital budgeting procedures are corporateiy outlayed in this chapter.
Chapter
four deals with various techniques used in analyzing the data collected.
The
last chapter which is chapter five summarized the research study and the conclusion down from the research
with recommendations.
1.7
DEFINATION OF TERMS
The term attributed to accounting ratio as a means of measuring efficiency in organizing are as follows.
Balance
Sheet Asset i.e Fixed and current
Asset liability
long-term liabilities income statement.
BALANCE SHEET:- This is a
statement of a company showing the wealth such the asset and liabilities of a
company at a particular data.
ASSET:- This is normally computed in fixed values fixed asset and
current Asset.
FIXED ASSET:- This includes freehold promises, motor vehicle, good will
etc. it is
usually show at original value.
CURRENT ASSET:- As the name implies is an assets,
which can be charged to cash, it
is not as durable as fixed asset, it comprises the closing stock, debtor cash at bank and cash in hand.
LIABILITIES:-
This shows the
amount which the company own to outsiders, it include capital creditors etc.
LONG TERM LIABILITIES:- Loan we also current liabilities which accrued from only a year. It includes
short-term loan short-term loan trade creditors etc.
INCOME STATEMENT:- This is
computed to show the net earning of the company.
It is divided up between the debenture holders other supplies of long-term loans.
However,
income statement shows the charges in wealth during a given period due to interaction of cost and revenue.
In addition, the
information which the company need for decision making should be determined from the accounting ratio
that has been computed.
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