THE USEFULNESS OF FINANCIAL STATEMENT IN ASSUASIVE THE PERFORMANCE COMPANIES AND IN GUIDING INVESTMENT DECISIONS (A CASE STUDY OF SUNRISE FLOUR MILL LTD ENUGU)

ABSTRACT

            The use of financial statement in any business organization cannot be over emphasized financial statements are needed by variety of people for different purposes .  for instance, the government needs the financial books of a company for taxation purposes, the investors want to know how profitable a company is and also the management of a company will like to know the level of their performance: all these cannot be known without the analysis of financial statements of the company or companies involved.

  The research work therefore, studies the usefulness of financial statements in assessing the performance of companies and in guiding investment decisions, in order to provide investors, management, government and others what the company is worth.

CHAPTER ONE

INTRODUCTION

            A financial statement is defined by accounting standard committee (ASC) as a balance sheet, profit and loss accounts, and statement of source and application of unds, notes and other statements, which collectively are intended to give a true and fair view of the financial position and profit or loss.  Several companies incorporate fixed assets valuations into their balance sheets, in which case the depreciation charge in profit and loss is based on revalued amount.  Some companies draw up their financial statements on a current cost basis, but this is rare compared with the use of historical cost or modified historical cost.

A financial statement is part of a company’s annual report, the purpose of which is to communicate information about the company to those who have the right to receive it for instance, the shareholders, in addition to investors, potential investors and other users of financial statements.

It provides an indication of company’s trading performance and gives a snapshot of aspects of its financial position at a particular date.  At a minimum, a financial statement consist is of accounting policy, balance sheet, profit and loss portraying organizations and income and expenditure for non-trading organizations, notes to the account, directors report, sources and application of fund and value added statement.  The analysis of financial statement or an account is therefore the interpretation, amplification and translation of facts and financial statements, the purpose is to draw relevant conclusions, therefore, making of inferences as to business operations, financial positions and future prospects.

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THE USEFULNESS OF FINANCIAL STATEMENT IN PERSUASIVE THE PERFORMANCE COMPANIES AND IN GUIDING INVESTMENT DECISIONS (A CASE STUDY OF SUNRISE FLOUR MILL LTD ENUGU). A RESEARCH PROJECT MATERIAL ON BANKING AND FINANCE