• 0 Review(s)

Product Category: Projects

Product Code: 00000845

No of Pages: 71

No of Chapters: 5

File Format: Microsoft Word

Price :



The study is aimed at examining the extent to which firms uses financial indicators as key information items which portray the financial health or otherwise of an organization. The broad objective of this study is to ascertain the company’s financial strength and weakness using financial indicator analysis and also to ascertain the yardstick for comparison of performance relative to other firms in the same industry. The primary and secondary source of data collection was used in this study and the stratified and systematic sampling techniques were used to select fifteen firms which served as the sample size of the study. The chi-square statistical tool was used to test the slated hypotheses and the findings revealed that there is significant relationship between a firm’s performance and financial indicators. It was concluded that firms appraise their performance using financial indicators more especially than profitability ratios which are computed annually to appraise their performance. It was recommended among others that management should not attach too much importance to the profitability ratio alone as other users have interest in leverage ratios and liquidity ratios.



Title Page                                                                                 i

Certification                                                                            ii

Dedication                                                                              iii

Acknowledgments                                                                  iv

Abstract                                                                                  v

Table of Contents                                                                   vi

Chapter One: Introduction                                       

1.1    Background to the Study                                                      1

1.2    Statement of Problem                                                             2

1.3    Research Questions                                                               4

1.4    Objectives of the Study                                                          4

1.5    Statement of Hypotheses                                                       5

1.6    Significance of the Study                                                       6

1.7    Scope of the Study                                                                 6

1.8    Limitations of the Study                                                         7

1.9    Definition of Terms                                                               8

Chapter Two: Review of Related Literature

2.1   Introduction                                                             10

2.2   Historical Background of Financial Indicators                 10

2.3   Classification of Indicators                                      12

2.4   Non-Ratio Financial Indicators                                        25

2.5   Users of Financial Indicators                                   26

2.6   Standards of Comparison                                                27

2.7   Limitations of Financial Indicators                          29

Chapter Three: Research Method and Design    

3.1    Introduction                                                                           33

3.2    Research design                                                                     33

3.3    Description of the Population of the Study                          34

3.4    Sample Size                                                                            34

3.5    Sampling Techniques                                                            34

3.6    Sources of Data Collection                                                    35

3.7    Method of Data Presentation                                                36

3.8    Method of Data Analysis                                                       37

Chapter Four: Data Presentation, Analysis and Interpretation                            4.1    Introduction                                                                           39

4.2    Presentation of Data                                                              39

4.3    Data Analysis                                                                         41

4.4    Hypothesis Testing                                                                 50               

Chapter Five: Summary of Findings, Conclusion and Recommendations         

5.1    Introduction                                                                           58

5.2    Findings                                                                                 58

5.3    Conclusion                                                                             59

5.4    Recommendations                                                                 59

References                                                                    61

Appendices                                                                             63




          1.1      Background of the Study

      Financial indicators are the monitoring points used to ensure that a department is meeting its financial goals set in the strategic plan. These indicators are typically monitored on a monthly basis with annual roll up (Wireman, 2010). Financial indicators are key information item contained in financial report (statement) which portrays the financial health or otherwise of an organization.

Measuring business performance is something which has been in business for a long time. Many organizations have been using financial indicator as net profit margin, Return on Asset (ROA) to name a few, to qualify the performance of the company (CIMA, 2004).

Financial indicators, properly use highlighted opportunities for improvements, they pinpoints “soft spot”. In a company and point the needs for further analysis and proffer solution to problem. The viability of a firm in an industry could be ascertained through the value shown from the financial indicators calculation from the financial statement (reports) (Abdallah, 2012).

Different users of financial report have interest in special component of information contained therein,that is the more reason why different types of indicators are computed such as liquidity, leverage, activity (asset management), profitability, market value ratio etc to outcross the interest of the various users. Different criteria of appraisal can be from these, which are very useful to the users.

          1.2      Statement of Problem

Every stakeholder in business has particular interest in business or firms financial statement and not all have the skills to analyze such information to enable them make relevant decision. Although most firms do measure their performance through financial indicators, it’s not done in a way that will be meaningful to the least stakeholder. Most time, high profits are reported but these are presented to the owner and other interested parties without support. It is only when analysis of these reported account are made that one can get further insight into the strength and weakness of a firm.

The closure of platinum Habib Bank (Bank PHB), Savannah Bank of Nigeria Plc is a test case, the major reason advanced by central bank of Nigeria is that of financial weakness. If financial indicators analysts have been made at that time and the entire public was following the trend most people wouldn’t have been victims. Therefore the exigency of financial indicator analysis to appraise corporate performance become apparent. This will enable shareholders employees, government etc to make relevant decisions.

Besides financial statement without analysis may not make meaning to most users; hence analyzing these statements by different indicators will be a yardstick with which most companies can be made.

The study therefore, intend to examine the extent to which banks and insurance companies operating in Delta State use financial indicators to evaluate their performance and also its limitation.

          1.3      Research Questions

The following research questions are addressed in the course of this work.

1.          To what extent do firm appraise their performance?

2.          To what extent do firm measure their performance?

3.          To what extent do firms compare their financial indicators?

          1.4      Objectives of the Study

i.            To ascertain the company’s financial strength and weakness using financial indicator analysis.

ii.          To ascertain the yardstick for comparison of performance relative to other firms in the same industry.

iii.        To evaluate which performance measure is better to be used in measuring the profitability of the firm.

          1.5      Statement of Hypothesis

This study addresses the following hypotheses.

Hypothesis One

Ho:  There is no significant relationship between a firm’s performance and financial indicators.

HI:    There is significant relationship between a firm’s performance and financial indicators.

Hypothesis Two

Ho:  There is no significant relationship between a firm’s appraisal performance and financial indicators.

HI:    There is significant relationship between a firm’s appraisal performance and financial indicators.

Hypothesis Three

Ho:  There is no significant relationship between the use of financial indicators and other forms of performance evaluation method by firms.

HI:    There is significant relationship between the use of financial indicators and other forms of performance evaluation method by firms.


          1.6      Significance of Study

This study is expected to be of significant importance to many parties. Since the study revolves around one of the popular issues of current business scenario because all users of financial statement are interest in the analysis of the information contained therein. So as to enable them deduce opinion about the financial indicator to appraise a firm the users can determine.

1.          The ability of a firm to meet its long term solvency, i.e. borrowed fund has been used.

2.          How efficient the firm has utilized it’s various assets in generating revenue.

3.          The overall operating efficiency and performance of the firm.

4.          To serve as a reference materials for both academicians and practitioners which would also help interested researchers to carry out more extensive studies in the area.

          1.7      Scope of the Study

This study focuses on examining the financial health of firms using financial indicators as a basis for evaluating corporate performance with relevant references to some selected banks which include Ecobank, United Bank for Africa (UBA), Zenith Bank and Insurance Companies (Staco Insurance Plc, Greater Nigeria Insurance Plc) all located in Asaba, Delta State.


          1.8      Limitations of the Study

This study is not without its limitations like any other study some of the limitation is that financial data beyond audited financial statements was unavailable to the researcher. This is so because according to the policy of the company those financial statements that have not been published in newspapers or the annual report of the bank cannot be disclosed.

There was also this financial constrain that prelude the researcher from conducting a job on the firms, the non-receptive attitude to respondents further compounded the problem while some were receptive and willing to comply by way of filling questionnaires open mindedly but others were not.


          1.9      Definitions of Terms

This study uses a comprehensive definition of some terms which may not be familiar to some individuals, they include.


A bank is a financial institution that deals with fund raising and the collection of customer’s fund, lending or investing surplus deposit until they are required for payment. A bank is also known as a financial institution where money are kept for safety and collected on demand or request.

        Insurance Company

This is a company that offers insurance policies to the public, either by selling directly to an individual or through another source such as an employee’s benefit plan.

        Financial Statement

This is a formal record of financial activities of an entity. These are written reports that quantify the financial strength, performance and liquidity of a company. This is a statement prepared by the directors of a company to be presented to the shareholders at the annual general meeting (AGM).


This is an urgent need or demand that one must deal with.


This is a standard used for judging how good or successful something is.

Buyers has the right to create dispute within seven (7) days of purchase for 100% refund request when you experience issue with the file received. 

Dispute can only be created when you receive a corrupt file, a wrong file or irregularities in the table of contents and content of the file you received. shall either provide the appropriate file within 48hrs or send refund excluding your bank transaction charges. Term and Conditions are applied.

Buyers are expected to confirm that the material you are paying for is available on our website and you have selected the right material, you have also gone through the preliminary pages and it interests you before payment. DO NOT MAKE BANK PAYMENT IF YOUR TOPIC IS NOT ON THE WEBSITE.

In case of payment for a material not available on, the management of has the right to keep your money until you send a topic that is available on our website within 48 hours.

You cannot change topic after receiving material of the topic you ordered and paid for.

Ratings & Reviews


No Review Found.

To Review

To Comment