TABLE OF CONTENTS
Title
Page
Certification
i
Dedication
ii
Acknowledgement
iii
Table
of Contents iv
Chapter One
1.1
Introduction
1.2
Statement of Problem
1.3
Purpose of Study
1.4
Historical Background of the Study
1.5
Significance of the Study
1.6
Research Question
1.7
Hypothesis
1.8
Limitation and Scope of Study Limitation of
Study
1.9
Definition of Terms
Chapter Two
2.0 Literature Review
2.1 Nature of Finance Statements Analysis
2.2 The Principal Tools of Analysis
2.3 Nature and purpose of Financial Ratio
2.4 Uses of Financial Statement Analysis
2.5 Major Category of Financial Ratios
2.6 Strength of Financial Ratio
2.7 Weakness of Ratio Analysis
Chapter Three
3.1 Research Methodology
3.2 Research Design
3.3 Data Instruments and Data Collection Method
3.4 Population
Chapter Four
4.1 Ration Analysis
4.2 Data Analysis
Chapter Five
5.1 Recommendation
5.2 Suggestions for Further Research
5.3 Summary and Conclusion
References
CHAPTER ONE
1.1 INTRODUCTION
The great value
of corporate financial reporting in view of development in both the money and
the capital market cannot be over-emphasized. The success of any enterprise can
be properly assessed only from its financial position as reflected in the
financial data. The accounting information summarises the economic performance
and the situation of a business enterprises. In order to arrive at the correct
conclusion, it is important that the account disclose of true and fair view.
Corporate reporting serves as an effective medium of communicating financial
and other data by companies to the shareholders, prospective investors,
government authorities and the general public.
Annual reports
and account are the most efficient means of communicating the financial
information to the shareholders and other interested group. Therefore, annual
reports are central to corporate reporting. Every organisation prepares their financial statement in such a way to
include profit and loss account shows the result of operation over a particular
period while the balance sheet shows the financial position at a particular
date. Financial statements make use of financial data in the balance sheet and
profit and loss account in order ot enable the uses of financial statement have
an insight into the better understanding of the financial statement.
The balance
sheet and the profit and loss account can be of great benefit to the users when
properly analysed. In order for the users of annual reports and accounts so as
to understand the financial statement. When confronted with framework of
analysis available to make attempt to get some facts from what is important
from the ones of less important data.
One of the
essential of financial accounting is to report the information to external
interested parties. Those that do not participate in the day to day activities
of the business such as shareholders, investors, bankers etc. There are
individuals and organisations that finances the firms operations. Each of these
parties has an interest in analyzing and interpreting one or more broad areas
of business especially its financial soundness and stabilizes the efficiency of
its management as well as the future prospect for an investor.
1.2 STATEMENT OF THE PROBLEM
The research
question centres on what the research work is designed to achieve with some
assumption, work is designed to achieve with some assumptions, speculations
that are tentatively accepted or an investigations purpose. It will extensively
deal with the purpose of the research work such as:
i.
What is the various evaluation methods used on
financial analysis?
ii.
Has financial analysis have any effect in
corporate planning and growth?
iii.
Why are the returns offered on investment by a
company relatively different from other companies with similar risk?
1.3 PURPOSE OF STUDY
Annual reports
and account provides a method of assessing the financial strength and weakness
of an enterprises using information found in its financial statement. The
purpose of this analysis is to gain an understanding of the firm’s current
financial condition as well as the future prospect, which in turn can serve as
the basis for decision making.
The purpose of
this research work are of two folds:
One, it seeks to
determine the efficiency of the management of any case study, Literamed
Publications Limited. To accomplish this objectives, the financial ratio that
measures the efficiency of an enterprise such as gross profit making, net
profit margin, returns on total assets, net assets and other necessary ratio
will be calculated and compared over a period of five years (2001-2005).
Second, the
calculations of other types of ratio to determine the overall performance of
the management of the Literamed Publication Limited and calculation will be
compared over a period of five years, (2001-2005). These ratios are liquidity
ratio, profitability ratio, debt and gearing ratio.
1.4 HISTORICAL BACKGROUND OF THE STUDY
Literamed
Publication Limited was established in April 1969. It first publications were
the monumental quarterly pharmaceutical index (medipharm). The company has
produced books in different areas such as education, religion books, children
books, medical journal, philosophy etc.
Literamed
Publication Limited specalises in the production of pre-primary and primary
school books under the label ‘Latern Book’. The consistency and steady focus of
the organisation has made the organisation unique. The consistency and steady
focus of the organization has made the organisation unique. The label ‘Lantern
pre-primary books and ‘lantern books’ and known for their high quality
features, standard illustrations and up to date information.
The motto or the
organisation ‘educational sound” is a conformation of what the company intends
to achieve through publications. Over the years, there is developments on
pre-primary books, primary secondary and tertiary schools books. Today, the organisation
has achieve their goals by being the publishes of verbal and quantitative reasoning
books used by both private and public schools.
1.5 SIGNIFICANCE OF STUDY
This research
work has been of great benefit to some people. The categories of those that
will benefit from this study are the directors, creditors, employee etc. The
benefits will be having a great knowledge on how a company should be efficient
in its operation. The accurate preparation in the company’s profit and loss and
balance sheet which is a great benefit to the users of account record.
1.6 RESEARCH QUESTION
The research questions
focus on the achievement of the research work. The research question are as
follows:
i.
What are the organisational sources of fund?
ii.
How adequate is the financial analysis?
iii.
Is the financial analysis important to your
organisation?
iv.
Is proper analysis of the performance of the
company helps in taking a better decision?
v.
Is management performance has relative effect on
the profitability and efficiency of the company?
1.7 HYPOTHESIS
The statement of
hypothesis will be carefully predicted as a guide to the research. This
include:
i.
Simple hypothesis (H)
ii.
Alternative hypothesis (H1)
iii.
Null hypothesis (H0)
a. H: There is no relationship between ratio
analysis and management performance.
b. H1: Ratio analysis affects management
performance.
c. H0: Ratio analysis does not affect the
management decision.
1.8 LIMITATION AND SCOPE OF STUDY LIMITATION OF
STUDY
A number of
predictable problems assail the analyst from attempting financial statement
analysis using financial ratio. One of these problems is non-availability
information’s that are needed to calculate some ratios. This researcher has to
rely solely on the information contained in the annual reports and accounts of
the enterprises.
SCOPE OF THE STUDY
The quality of
information of this research work is continued to the analysis of annual report
and account of Literamed Publication Limited and the analysis would focus
specially the profit and loss account and balance sheet. This research work
cannot be quite generalized for other publications. As attempt is made to
compared the findings with the average, the method of comparism comparing of
financial ratio of Literamed Publication Limited over a period of five years
(2001-2005).
1.9 DEFINITION OF TERMS
Financial Analysis: This is analysis of
financial statement. It can also be referred to as the breaking down of figures
and subsequently expression of such figures in relation to the other, for the
purpose of comparision.
Investors: An investor is being
referred to as a person or an organisation who invest money in something or in
a business.
Management: These are the people who
runs and controls a business or similar organisation
Evaluate: This form an opinion of the
amount a value of something after thinking about if carefully.
Login To Comment