TABLE OF CONTENT
Title Page
Certification
Dedication
Acknowledgement
Table of Content
CHAPTER
ONE
INTRODUCTION
1.1 Historical background of the case study
1.2 Statement of the Problem
1.3 Objective of the Study
1.4 Research Question
1.5 Significance of the Study
1.6 Scope of the Study
1.7 Limitation of the Study
1.8 Plan of the Study
1.9 Definition of Terms
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
2.2 Conceptual Framework of Ratio Analysis
2.3
Approaches to Use of Ratios
2.4
Classification or Types of Ratios
2.4.1
Liquidity Ratio
2.4.2 Leverage Ratios
2.4.3
Activity Ratios
2.4.4
Probability Ratio
2.5 Place of Ratio Analysis in an Organization or Financial
Institution
2.6 Expected
role of managers in relation to ratio analysis
- Contributions of Investors to Administrative
Performance in Terms of Financial ratio
Analysis
2.8 Contribution of Ratio Analysis in Decision Making in an Organization
CHAPTER
THREE
RESEARCH
METHODOLOGY
Introduction
3.2
Population Size
3.2 Source of Data
3.3.1
Primary source
3.3.2 Secondary source
3.4 Research Instrument
3.5 Data Analysis Procedure
CHAPTER
FOUR
DATA
PRESENTATION; ANALYSIS AND INTERPRETATION
4.1 Introduction
4.2 Data Presentation and Analysis
4.3 Computation
of some selected ratio using the
United
Bank for Africa (U.B.A) Statement of Account as Below Balance Sheet as at Decembers 31st 2011.
4.4 Summary of Findings
CHAPTER
FIVE
SUMMARY, CONCLUSION AND
RECOMMENDATION
5.1 Summary
5.2 Conclusion
5.3 Recommendation
BIBLIOGRAPHY
APPENDIX
I QUESTIONNAIRE
CHAPTER ONE
1.0 INTRODUCTION
In every organizing irrespective of its size, ownership, structure, impact of ration analysis on management decision making occupy a crucial position.
However, given this centrality, it can
be said that behind every successful organization, the process in which the
management arrive at decision making is very important as far as financial
management is concerned in the private sector of the economy and specially in a
banking institution like united bank for Africa (U.B.A)
In a nutshell, the impact of ration analysis on management decision making which is the most preoccupation of this research work is referred to the manner through which the management of organization takes decision suitable for profit as possible, future planning, controlling current performance and future development through liquidity analysis, leverage analysis and activity analysis.
Significance change has taken place in recent years in the size and complexity of both private organization and public organization because of this management is faced with evaluation in technical, social political and economic forces. As a result, the methods of arriving at the decision as become more difficult to management especially in accounting activity of the organization.
This
research is devoted to examination of some major impact of ratio analysis in
financial institution (united bank of African).
1.2 HISTORICAL BACKGROUND OF THE CASE STUDY
Today’s
united for African Plc (U.B.A) is the product of the merger of Nigeria third
and fifth largest banks, namely the old UBA and erstwhile standard trust
bank Plc (STB) respective and subsequent acquisition of erstwhile continental
bank limited (CTB).
The union emerged as the first
corporate combination in the history of Nigeria banking.
United
back for African history dates back to the founding of old UBA in 1961, and
erstwhile STB and CTB both in 1990 although today’s’ UBA emerged a time of
industry consolidation induced by regulation, the consolidated UBA was borne
out of desire to lead domestic sector to a new era of global relevance by
champion the creation of the Nigeria consumer. Finance market leading a private
public sector partnership at supporting the acceleration of Nigeria
economic development, and growing the institution while spreading its
footprints across African to earn the reputation as the face of banking in the
continent. Today the consolidated is the largest financial services institution
West African with a balance sheet size in excess one trillion naira (under USD
eight billion) and more six million customer account operating out of the two
most vibrant economics in the sub region Nigeria and Ghana. It as over six
hundred and thirty (630) retail distribution centers across Nigeria, its main operation base, and 8 branches
in Ghana, outside Africa, it
also has presence in New York
and Cayman.
United
bank for African (UBA) Ilorin
main branch has the total staff strength of 44 staffs, of which 6 the senior
staff, while 35 are junior staff. The bank is made up of 3 units which are the
marketing unit is headed by various persons such as the branch manager. Branch
operational manager and auditor.
1.2 STATEMENT OF THE PROBLEM
The
part of ratio analysis as a tool for decision making have the following area of
concern. 75 ratio analysis useful in investment appraisal?
- Whether management relies on ration analysis for decision making?
- Do ration analysis really determine the wealth maximization of shareholder? Or
- It ratio analysis or management tool or technique use in determining the liquidity, stability profitability and efficiency of the organization?
- Whether ratio analysis can be used to ascertain the strength, weakness, opportunity and treat of the organization.
- Whether ration analysis can be used to determine the trend of development and performance of the organization over time.
At
the time of chooses this topic the above was what the researcher have in mind
and therefore pushes to fine out what is the need for ratio analysis in banking institution like
UNITED BANK FOR AFRICA
1.3 OBJECTIVE OF THE STUDY
The
primary objective of this researcher is to fine out how efficient and
effectively does the management evaluate its financial position. Also the performance
of the institution with regards to the financial analysis or ration analysis in
making a quantitative judgment about the institution financial position and its
achievement which include. It is further generalized as the following:
- The
effective implementation of the traditional function of banking acceptance of
deposit to find lending.
- Efficient
financial resource mobilization without inflationary money supply expansion for
economic development especially when external borrowing is viewed as a last resort.
- increasing
sense of; commitment and identification with the institutional and it’s good by
institution a design and activities of people and adopting a participating or
democratic style of management
- Maintaining
accountability of assets.
1.4 RESEARCH QUESTION
For
the purpose of this study, the following question is raised to enable the
researcher find possible solution to the identified problem if properly
answered.
- How is the application of ratio analysis
useful when it comes to decision making in the organization?
- In what way is the application of ratio
analysis useful in evaluating the financial performance of the organization?
- How do interested parties in united bank for
African apply and use ratio analysis in evaluating the bank before taking their
decision?
- How is ratio analysis of importance when it
comes to granting of loan and advances to customer?
- To what extent does ratio analysis help the
chief executive of the back in decision making?
- How is ratio analysis of importance to the
balance sheet of the bank
1.5 SIGNIFICANCE OF THE STUDY
The significance of impact of ratio analysis in financial institution cannot be over emphasized. It is therefore expected that, this research work is bound to be beneficial to the following;
- Management;
most management decision are based on information from ratio analysis.
Management planning is also supported by vital information from ratio analysis.
- Shareholders; for shareholders to deter mine their
wealth maximization, they rely on information from ratio analysis such as
stability ratio and leverage ratio.
- Potential investors; for potential investors
to embark on investment in an organization, the need to know how reliable the
organization is and for them to know or ascertain the viability of the organization
is based on vital information from ration analysis.
- Employees;
the interest of employees in the organization is on how their welfare can be
improved. They are able to obtain information for the agitation for improvement
on their welfare through ratio analysis such as profitability ratio.
- Students; it is expected that students
mostly undergraduates stand to benefit from this research work because it will
serve as a source of ratio analysis.
- Government; government also rely on
information from ratio analysis in the assessment of the organization for tax
purpose such as profitability and liquidity ratios
1.6 SCOPE OF THE STUDY
The
scope of this research work will be specially restricted to UNITED BANK FOR
AFRICA PLC ILORIN branch; with regards to its accounting ratio which will help
in;
- The
assessment of profitability
- Assessment
of liquidity
- Assessment
of activity
- Assessment
of failure
1.7 LIMITATION OF THE STUDY
In search of data, problems were faced
by the researcher despite all the explanation of the purpose of the study
- In
the first place respondent did not react to the question sent to them this lead
to insufficient data.
- Also
cost and time lad a great impact on the study since no adequate means were
available and time under consideration was short.
1.8 PLAN OF THE
STUDY
This
Research work consist of five chapters chapter one of this research work is
made up of the introduction, the statement of the study, the objectives of the study,
the significance of the study, the limitation of the study, the definition of terms
and the plan of the study.
Chapter two of this research work is the literature
review.
Chapter three of this research work also includes
research methodology.
Chapter four consist five of this research work includes
summary, conclusion and recommendation.
1.9 DEFINITION OF
TERMS
The
terminologies used in this study are defined below for the better understanding
of this work so that research will not to be misinterpreted.
i. BANK; it a financial
institution which primary holds out itself to accept deposits from consumers
and payout on demands.
ii. RATIO ANALYSIS;
refer to the determination of the significant relationship which exist between
figures as show in a firms performance.
iii. PROFITABILITY;
these measures indicate whether the company is performing satisfactorily. They
are used among other things, to measure the performance of management to
identify whether a company may be a worth while investment opportunity and to
determine a company’s performance relative of it’s competitors.
iv. MANAGEMENT;
management can be describe as the art of working particularly through people,
for the achievement of the broad goals of an organization.
v. LIQUIDITY:
liquidity measure the ability of a business to meet short term obligation.
vi. ACTIVITY;
help assess the efficiency of managers actions.
vii. RETURN ON CAPITAL EMPLOYED: this is the yardstick employed to measure the efficiency of the management in utilizing the assets of the business.