The statement of problem highlighted that the
management is constantly faced with the problem of making alternative decision
due to the fact that resources are relatively scarce. The research question
were on factor affecting the use of financial statement analysis information,
adequacy and accuracy of accounting information by managers in their decision
making process. It was found that the employees of First Bank of Nigeria Plc,
Awka, will be inspired for better performance when the board of directors gives
maximum attention to their welfare and prompt payment of salaries as a
motivational incentive, encouragement of free two-way communication etc. However,
it was further found that these issues are not given the necessary attention as
found by the study. It was recommended that the board of directors of First
Bank of Nigeria Plc should give attention to the welfare of the employees as
well as to encourage workers two-way communication and that necessary working
tools and other logistics, be provided for the employees to enable them perform
TABLE OF CONTENTS
of Contents vi
One: Introduction 1
Background to the Study 1
Statement of Problem 3
Research Questions 4
Objectives of the Study 5
Statement of Hypotheses 5
Significance of the Study 7
Scope of the Study 8
Limitations of the Study 9
Definition of Terms 10
Chapter Two: Review of
Related Literature 14
Definition of Financial Statement 15
Objectives of Financial Statement 17
Users of Financial Statement 19
Forms and Content of Financial Statement
What is Financial Statement? 27
Purpose of analyzing
Financial Statement 28
Definition of Management 30
Management Decision: Proper Analysis of Financial
Statement as a Basis 32
Techniques and Tools of Financial
of Ratios 38
of Ratios 40
of Financial Ratios 47
of Financial Statement Analysis 47
of Financial Statement 48
Chapter Three: Research
Method and Design 49
Research Design 49
Description of Population of the Study 49
Sample Size 50
Sampling Technique 50
Sources of Data Collection 51
Method of Data Presentation 52
Method of Data Analysis 52
Chapter Four: Data
Presentation, Analysis and Hypothesis
Presentation of Data 53
Data Analysis 61
Hypothesis Testing 64
Chapter Five: Summary
of Findings, Conclusion and
Summary of Findings 68
Statement of Problem
In fact, it is not
surprising that in most cases of performance evaluation in the business
organization, there is always an expression of dissatisfaction. In this
research, some of the problems associated with it are; different accounting
policies adopted by companies make comparison difficult. Financial ratios are
expressed in figures and this may be misleading unless one remembers the
principle upon which they are based. Ratio analysis is derived using historical
data and there is a question as to whether or not the data provides relevant
basis for making predictions.
1. Does different accounting practices adopted
by firms affect making comparison of ratios?
2. Does the information generated using ratio analysis
derived from historical data provides relevant basis for prediction?
3. Does the ratio expressed in figures be misleading
when you do not know the principles upon which they are based?
4. Does the changes in the general price level
affect ratios derived from financial statement?
Objectives of the Study
The following are
objectives of the study:
1. To find out if different accounting
practices adopted by firms affect making comparison of ratios.
2. To ascertain if the information generated
using ratio analysis derived from historical data provides relevant basis for
3. To determine if ratio expressed in figures
cannot be misleading when you do not know the principles upon which they are based.
4. To determine if the changes in the general
price level affect ratios derived from financial statement.
Statement of Hypotheses
HO: Different accounting practices adopted by firms do
not affect making comparison of ratios.
HI: Different accounting practices adopted by firms
affects making comparison of ratios.
HO: Information generated using ratio analysis
derived from historical data do not provide relevant basis for prediction.
HI: Information generated using ratio analysis
derived from historical data provides relevant basis for prediction.
HO: Ratio expressed in figures cannot be
misleading when you do not know the principles upon which they are based.
HI: Ratio expressed in figures cannot be
misleading when you know the principles upon which they are based.
HO: Changes in the general price level do not
affect ratios derived from financial statement.
HI: Changes in the general price level affects
ratios derived from financial statement.
Significance of the Study
One importance merit of
the research is that it would help the management of First Bank of Nigeria Plc,
Awka branch and interested firms to identify their strength and weakness and
also work vigorously towards achieving its corporate objectives.
It could be a source of
information and reference material to other researchers both in business
enterprises and institution.
Finally, it will also
assist investors, shareholders and other interested persons to appreciate the importance
of financial statement analysis about investment, disinvestment and asset management.
Scope of the Study
There are several firms
engaged in business activities, but for the purpose of the study, we will
restrict our research to Guinness Nigeria Plc, Benin City. It is centred on
financial statement analysis as a tool for effective decision making and it is
limited to Guinness Nigeria Plc management and staff and with a total sample
size of 50 between 2010 – 2014.
Limitations of the Study
The research was
operated with some limitations which ought to be stated for proper appreciation
of study. These limitations include:
of financial and resources is limited being that the researcher is a student
and has no source of income/finance except her pocket money.
showed a certain reluctance to answer some questions especially those
pertaining to their company’s decision making.
Given the time
space in which the researcher had to do this work, it was not possible to touch
every aspect of this subject matter.
Definition of Terms
The following are the
terms used in this research work:
is the collecting, compilation, recording and analyzing of a business financial
transaction, the preparation of financial reports and the presentation of such
report to management to assist in decision making.
Annual Reports: This
shows the financial result of operational plans for future communications to
its shareholders and other interested parties.
Financial Statements: This is a document of record used by a firm to
communicate its financial information to those who have interest in the
This is also known as operating statement. It reflects the effort of management
operating decision on business performance and the resulting profit and loss
for the owners of the business over a specified period of time.
This described as the economic resources, i.e. things of value owned by a firm.
These are debts payable in the future by the firm to the creditors.
This is the indicated quotient to two in mathematical expression.
This is the systematic use of data interpreting financial statement so that the
strength and weakness of the firm, as well as the historical performance and
current financial condition can be determined.
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