TABLE OF CONTENT
CHAPTER ONE: INTRODUCTION
- Background of the study
- Statement of the research problem
- Justification for the study
- Objective of the study
- Research hypothesis
- Scope of the study
- Plan of the study
- Limitation of the study
- Definition of term
CHAPTER TWO: LITERATURE REVIEW
- Theoretical framework
- User of Financial Statement
- Management of an organization
- Management control system
- Method of performance evaluation
- Analysis and interpretation of financial
statement
- Definition and relevance of financial ratio
- Classification of ratio analysis
CHAPTER THREE: RESEARCH METHODOLOGY
- Introduction
- Population and sample size
- Method of data collection
- Brief History of First Bank of Nigeria Plc.
CHAPTER FOUR: PRESENTATION AND ANALYSIS
4.0 Introduction
4.1 Socio – demographic characteristic of
response
4.2 Presentation of Questionnaire response
4.3 Testing of hypothesis
4.4 Result and Analysis of Liquidity ratio
CHAPTER FIVE: SUMMARY, CONCLUSION AND
RECOMMENDATION
CHAPTER ONE
INTRODUCTION
- BACKGROUND
OF THE STUDY
The concept of business entity in accounting practices which defines business as a separate entity from the owner brings forth stewardship reporting and accountability in any organization. Mores, the going concern concept anticipates a continuous life a firm within a foreseeable future. That is why the ultimate determined of the remain perpetually.
Moreover,
the aim or objective of financial manager is to provide meaningful financial
information about business enterprises to the outside world and for internal
control and management in decision making.
These financial information are presented in financial statement. They are means of conveying to the management
interested outside a concise picture of the profitability and financial
position of a business. They constitute
a report of managerial performance attesting to the managerial success or
failure and flashing warning signal of inpending difficulties. (Meigs and meigs 1979), so financial
statement obviously important to enable the user that have a clear picture of
the position of organization. It reports
the liquidity and solvency of the company and the claim of these resources i.e
debt owned, the equity of the owner and presents cash present cash position of
the company.
It comprises comparative balance sheet, profit and loss account, income statement, cash flow statement, auditors report and some other necessary information base on year’s assessment.
Despite
the fixation of financial statement, many user often fail to comprehend fully
the information it intended to pass across, thus their desire one not met. This is due to the ambiguity of the financial
statement where by the where by the volume of the data and figure mislead the
users. In this sense, the analysis and
interpretation of the statement are imperative.
Financial statement can be converted and interpreted
using three techniques.
- Vertical or Static Analysis:- It examines relationship within a statement. It deals with the relative percentage value of the statement.
- Horizontal or Dynamic Analysis:- This involves comparison of financial statement in respect of two more years. A weakness of this analysis is that comparism with the past does not afford any basis for evaluation in absolute terms.
- Ratio analysis: Is a commonly used technique in analyzing financial statement and it involves these of two difference economic units to ascertain performance.
It
is obviously paramount since it practically evaluate performance that is check
how strong or weak a company is.
Therefore its interpretations are easily understand by the users.
1.2 STATEMENT
OF THE PROBLEM
Financial
Ratio Analysis is a widely used took assessing the performance of an
enterprises.
Financially statement is prepared in terms of historical costs. They do not fully reflect economic resources and managerial, hence poor decision may be made. The users of financial information are carried away by the figures displayed in the financial statement observing the trends of the financial investment while over – looking the performance of management as assess whether their resources have out to effective use. The analytical comparism of a large information is a problem to the users (The management of the company and the external users. Investors, analyst, creditor government and public.
1.3 JUSTIFICATION
FOR THE STUDY
Ratio
analysis being what it is are the production of relations for internal and
external financial reports are important to summarize key relationship and
results in order to appraise financial performance.
In
this assessment this research will be of immense value in recent knowledge of
at the enterprises and managerial achievement.
This research is very useful to user of account and financial
information. It is also to supplement
the existing of the user of financial ratio as guide towards deterring
company’s achievement as well as to show how financial ratio analysis can identity
the strength and weakness of a company.
The research work can also serve as a material for students who are interested in the study of financial rations as a tools for performance appraise.
- OBJECTIVE
OF THE STUDY
The
study into financial ratio analysis as a tool for appraising performance is to
assist the use of financial information make decision predict the future and
monitor possible irregularities in managerial behaviours in business. Thus the main objective of study are:-
- To determine the strength, weakness and opportunities based on the firms financial statement or performance and the threats to the continued existence of the organization.
- To assess the extent to which ratio analysis serves as techniques aid in decision making by management. To find out the extent, which the management. To find out the extent, which the management of the company has been able to run and control effectively and efficiently, the assets and owners equity between the period under review.
- To find out the extent to which the trends indicated ratio are useful for prediction of the future last to make recommendation to the company.
- RESEARCH HYPOTHESIS
Hypothesis
is assumptions upon which the research base his finding for a data
collected. The hypothesis basically formatted
to be tested.
Ho
– Ratio analysis cannot serve as a tool for measuring managerial performance.
Hi
– Ratio analysis can server as a tool for measuring managerial performance.
Ho
– Ratio analysis can not serve as tool for measuring managerial performance.
Hi
– Ratio analysis can serve as a tool for measuring profitability and efficient
of a firm.
While
chi-square is used to test validity of the hypothesis.
- SCOPE
OF THE STUDY
This
study has been limited five years financial summarize of First Bank of Nigeria
PLC. Profit and loss account the value
added statement using ratio and adequate interpretation was analyzed.
The
study is carried out base on the fact that account represents a true and fair
view of the company’s affair and not misleading.
Moreover,
financial ratio will be compared with that of previous years using common size
of statement, treads analysis i.e reaction of the economic unit overtime of the
firm horizontal analysis.
The
period was choosing because of its available financial statement representing
its operation within the period 2002 to 2006.
- PLAN
OF THE STUDY
The
research is written to examine financial ratio analysis as a tool for
performance appraisal.
The
study begins with chapter one that deals with background of the study statement
of problem justification of the study and definition of terms. Chapter two deal. With the literature review of the work of
other author related to this research.
Chapter three emphasizes on research methodology: type of data
population and sample size, method of data collection, method of data analysis
and brief history of First Bank of Nigeria Plc, Ilorin Chapter. Chapter Four embraces the data presentation
and analysis testing of hypothesis result and analysis of liquidity ratio. Chapter five deal with summary, conclusion
and recommendation.
- LIMITATION
OF THE STUDY
In
the cause of carrying out the research the following limitation are
encumbered. The limitation of the study
is majority the limited available and strick access to some data’s demanded by
the research from the appropriate body in the organization as a result of high
work schedule but however due to continuous patronage the data was later
discharge.
Another problem that limited against the smooth conduct of this research work was the high cost of transportation and also strick assess to other schools library but with the help of financial support both from our parent and school authority, the stress or limitation was over come.
- DEFINITION
OF TERM
Performance:
Is the ability to operate as well as action or achievements consider in
relation to how it is (Oxford Advance Learners Dictionary 1995).
Financial statement: Are the instrument panel of a business enterprises and constitute a report on managerial performance attesting to managerial failure or success and flashing warming signal impending difficulties (Meigs and Meiga, 1979).
Ratio:
Is a simple mathematical expression as well as one member expressed in term of
another to show the relation between them and is the most widely use tool in
analysis and interpretation of financial statement.
Balance sheet: A statement that show the financial position which summary or the nature and amount of company asset and liabilities and net worth of company in particular year.
RATIO ANALYSIS AS A TOOLS FOR PERFORMANCE APPRAISAL IN NIGERIA FINANCIAL MARKET (A case study of First Bank of Nigeria Plc, Ilorin Branch)
