TABLE OF CONTENTS
Table of contents
- Purpose of the study
- The scope and limitation of the study
- Problem analysis
- Significant of the study
- definition of terms
- organization of the study
- Current literature base on variable of the theories
- Uses of accounting ratio
- research methodology
- historical background of cocal-cola plc
- organization chart
- method of data collection
- the sources of data collection
- Presentation and
- Profitability ratios
- Liquidity ratios
- Leverage ratios
RATIO analysis is a powerful tool of financial analysis.
According to Kennedy and macmillian , RATION is defied as the indicated quotient of two mathematical expressions” and as the relationship between two or more thing” in financial analysis a ration is used as an index or yardstick for evaluating the financial position and performance of a firm.
The compilation of trading, profit and of loss account and balance sheet represent the end product of a series transaction which have taken place over a particular period of time in order to make use of the information presented in all final account and the balance sheet, the user needs to analyze and interpret the meaning before making any conclusion. The accountant normally comments on final account and balance sheet either prepared by him or by other and interpret their significance doing so, he may find out that the accepted form of accounts and balance sheet are not easily followed by the lyman: therefore , he re- design the form so hat the figure becomes more intelligible to those with out expert knowledge in accounting. The first stage in the analysis is the development of a systematic review of the accounting data with the aid of accounting ratios, which shows the relationships of the result of the firm’s activities.
The interpretation of the final account and the balance sheet could there after be carried out using he accounting ratio so obtained from the result of the activities.
A ratio is meaningless unless interpreted against some standard. Two standard are used.
1. Trend analysis and
2. Comparative analysis
Trend analysis involves` the behaviours or ratio for a period of time, while comparative analysis requires the compassion of a ratio in a particular firm to another firm.
The ratio analysis involves comparism for a useful interpretation of the financial statement. a single ratio is itself does not indicate favorable on unfavourable condition. It should be compared with some standards.
- Ratio calculated from past financial statement of the some firm.
- Ratio of some selected firms specially the most progressive and successful at the point in time.
- Ratio of the industry to which the firm belongs.
Ratio analysis in addition provide us the means by which we test the efficiency of various features of the business as presented by the financial account, it also or the performance of the organization between different. Years.
The performance of any organization can be measured form it income statement and balance sheet. Therefore, the accounting ratio uses the financial data from balance sheet and income statement to evaluate the company’s performances
Many question had been raised as to how to measure the managerial performance of a company from year to year, which is t he goal of financial manager to provide meaningful financial information about the business.
- PURPSE OF THE STUDY
The basic aim of this project is to facilitate the ratio behind various decisions that are taken in the business organization, in a difference situation at a point in time. The purpose of the study also is to find out how coca-cola plc, fared in the past two or three year in term of profitability, efficiency and effectiveness.
The study will also attempt a practical application of what the theory postulates in terms of performance evaluation.
This particular research aims at studying the use of accounting ratio as a measure of organization. It will also stress reasons why various business activities embark on by business organization have been uncreative for the continues existence of business.
- THE SCOPE AND LIMITATION OF THE STUDY
This project will limit itself to an exhaustive analysis of the financial statement of coca-cola plc for a period of two to three years, using accounting ratios at tools from analysis.
This project will also show important business decisions a re taken because of adequate business information that is available.
Furthermore, this project will be limited to ratio analysis and the ratio that will be studied includes to following.