TABLE OF CONTENTS
Title page i
Table of content v
- Background of the
- Statement of the problem 5
- Objective of the study 7
- Research Question 9
- Significant of the study 9
- Scope and Limitation of the study 10
- Research Method 11
- Definition of Terms 12
- Literature Review 14
- Need for Financial
- Financial Ratio Analysis 20
- Uses of Financial Ratio 23
- Profitability Analysis 26
- Types of Profitability Ratio 29
- Uses of Standard in Ratio Analysis 36
- Limitation of Financial Ratio 39
- Need for Financial Analysis 18
- Historical Background of United 42
Bank for Africa Plc
- Mission and Vision of the Bank 44
- Accounting Policies Operated by the Bank 45
- Data Specification 46
- Research Instrument 47
- Techniques of Investment 47
- Personal Interview 48
- Data Analysis 50
- Limitation of Methodology 51
- Presentation and
Analysis of Data 52
- Summary of Financial Statement for the 52
part five years of UBA Plc.
- UBA Plc Trend Analysis Table 64
- Summary of Finding 65
- Recommendations 67
- Conclusions 69
- Appendix 71
- Journals 79
- Bibliography 80
- BACKGROUND OF THE STUDY
The extent of which corporate objective are achieved depends on the quantum and quality of resources as its disposal. We all know that resources are not only scare relative to the demand for them but also waiting assets. For example, plants become absolute, land loses it fertility, money get spends and executives (men) get old. The scenario implies that resources must be constantly aquired used efficiency and replaced” (Asien, 2000).
The fact that activities mentioned above cost money implies that the survival of the firm depends on the profit realized by it. Profit can therefore be defined as the excess of income over expenditure.
The definition of profit depends on the information needs of the company. If the underlying profitability of the business the objective review a company’s, result, then it is an operating profit. i.e gross profit less expenses.
According to Ellis (1993) says that “Financial reporting of profit provides a key measure of the performance outcome, associate with performance outcome associated with an organization strategy”. This means that before the performance of a business can be evaluated a proper profit measure approach must be operated by the organization. Therefore, the function of financial manager is to include profit planning.
The term profit planning refers to the operating decision in the area of pricing, costs, volumes of out pout and the firms selection of product brings. Profit planning is therefore a pre-requisite for optimizing investment and financing decisions (Mao and James 1969).
The major aim of establishing a business is to make profit unless adequate (net profit) are generated and used for the replacement of resources, the firm will eventually be run down., profit analysis in business have the following advantages:-
- It helps to increase the equity control of shareholders through retained earning.
- It also helps to raise the loss absorptive capacity of the organization.
- The ability of the companies to pay its dividends depends on the size of its profits.
A company should earn profits to survive and grow other a long period of time. Profits are essential, but it would be wrong to assume that every action initiated by management of company should be earned at maximizing profits, irrespective of social consequences. Although, profits is the ultimate output of a company, and it will have no future say if it fails to make sufficient for a firm and the reporting of its in the financial statement is not just sufficient but to show the weak and strength of a real accounting system that is in the usefulness of its application rather than information or data gathering processing aspect (Paul et al, 1972).
In this view, the financial manager, should, continuously evaluate the efficient of its company as to achieve its targeted goal i.e profits. Financial statement of companies are tools which produces a means through which this evaluation can be carried out. Meaning that financial statement should be used to examine the statement of success of the business over the period. Also willsmore (1971). Confirm this statement that management use financial statements as working tools with which to obtain the most effective results in the control of business affairs so as to ensure the adequacy of the over all result, in the profitability and financial strength of the business as whole “financial ratio are therefore employed as means of paper evaluation for the business.
- STATEMENT OF THE PROBLEM
Organization is expected to keep records of their transaction over the year. Adequate and proper records should be kept in order to measure financial performance of the business.
Over the years, it has been realized that financial statement i.e the profit and loss account and balance sheet are not well prepared which as a result of liability of most organization to meet their financial obligation.
This may be as result of the following reason:
i.) Poor Management or managerial control over the business affair.
ii.) Lack of proper and adequate recording and keeping of books account.
iii.) Inefficient use of the firm’s financial assets over the years
iv.) Window dressing at top management level of the organization.
v.) Change in according policies operated by the company.
vi.) Changes in the general price level and increase economic fluctuation over the years.
The problem of this study is to determine how financial statement=s can serve as a better tool for measuring the performance of a business over the years, so that night decision can easily be taken by the users. It financial statements help in knowing how profitable business has been by various interested parties. For example shareholders, creditors, bank and customers.