THE ROLE OF RATIO ANALYSIS IN BUSINESS DECISIONS A CASE STUDY OF O. JACO BROS. ENT. (NIG.) LTD., ABA, ABIA STATE
TABLE OF CONTENTS
Title Page
Dedication
Acknowledgements
Table of Contents
Abstract
CHAPTER ONE
INTRODUCTION
- Background Information 1
- Statement of Problem 2
- Objectives of the Study 5
- Research Question 6
- Significance of the Study 6
- Scope of the Study 7
- Limitation of Study 8
- Definition of Terms used in the Study 9
- Brief Historical Background of O. Jaco Bros. Ent. (Nig.) Ltd, Aba, Abia State.
Reference
CHAPTER TWO
REVIEW OF RELATED LITERATURE
- Introduction
- Financial Statement Analysis
- Parties Interested in Financial Statement Analysis
- Objectives of Financial Statement analysis
- Sources of Information for financial
- Statement Analysis
- Tools and Techniques of Financial
- Uses and Objectives of Ratio Analysis
- Types of Ratio Analysis 29
- Univariate Ratio Analysis 29
- Multivariate Ratio Analysis 62
2.9 Limitations of Ratio Analysis
Reference
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
- Research Design 72
- Data Collection Technique 72
- Population 73
- Sample Size and Sampling Technique 74
- Instrument for Data Collection 75
- Questionnaires Administration 75
Reference
CHAPTER FOUR
PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA
- Introduction 77
- Data presentation and Analysis 77
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
- Introduction 86
- Summary and Discussion of Findings 86
- Recommendations 88
5.4 Conclusion 89
Reference 91
BIBLIOGRAPHY 91
APPENDICES
Appendix 1 Research Questionnaire to the
Management and Staff of O. Jaco Bros. Ent.
(Nig.) Ltd., Aba. 94
ABSTRACT
Accounting information provided by means of financial statements- The income statement and the Balance Sheet are often in summarized form. Viewed on the surface, the truths about the results and the financial position of a business hidden in them remain veiled. To be of optimal benefit and as well enable the users make well – informed decisions, financial statements need to be analyzed by means of ratios. Therefore, in order to establish the role of ratio analysis in business decisions, this research is carried out, using O. Jaco Bros. Ent. (Nig.) LTD., Aba Abia State as the Case study. The researcher made use of both primary and secondary sources of data collection. However, for the former, questionnaires were administered, whereas for the later, relevant were received. The data Collected via the primary data sources were analyzed using simple averages and percentages. After ratios analysis conducted on the chapter four, mode at 95 level of confidence (5% level of significance). Finally, it was established that ratios analysis evils business decision.
CHAPTER ONE
INTRODUCTION
- BACKGROUND INFORMATION
The two primary objectives of every business are profitability and solvency. Profitability is the ability of a business to make profit, while solvency is the ability of a business to pay debts as they come due. (Hermanson et al, 1992: 824). However, the achievement of these objectives requires efficient management of resources of the business through planning, budgeting, forecasting, control, and decision – making. Also, the strengths and weakness of the business need to be identified and necessary corrective measures applied. Interestingly, accounting provides information that facilitates these functions.
Basically, accounting measures and communicates economic information needed for decision –making. Thus, the American Accounting Association (in Okezie, 2002:1) defined accounting as “the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by the information”. Statement and the Balance Sheet. The Income Statement shows the profitability or profitability or operational result of a business, while the balance sheet shows the solvency or financial position of a business.
Although profiles are often used as the basis for judging the performance of a business, such profits must be related to the various items of the financial statements in order to be meaningful and useful for decision making. Furthermore, owing to the summarized nature of financial statements, a lot of truths are hidden in them. Thus, they need to the analyzed and interpreted by means of financial ratios to enable the users understand the meaning of the absolute amounts shown in them, and make informed business decisions.
In this regard, Essien (2006:144) observed:
Financial statements carry lots of financial Information that are hidden in the figures. The figures in financial statements become more useful when they are related to each other or to some other relevant financial data. Therefore, users of financial information go a further step to establish relationships (or ratios) among selected data in financial statements.
According to Igben (1999:423), “Accounting {or financial} ratio is a proportion or fraction or percentage expressing the relationship between one item in a set financial statements and another item in the financial statements. Accounting ratios are the most powerful of all tools used in analyzed and interpreting financial statements”. Therefore, ratio analysis involves taking stats of number (or items) out of financial statements and forming ratios with them, to enhance informed judgments and decisions (Lasher, 1997:66).
DOWNLOAD COMPLETE PROJECT MATERIAL
THE ROLE OF RATIO ANALYSIS IN BUSINESS DECISIONS A CASE STUDY OF O. JACO BROS. ENT. (NIG.) LTD., ABA, ABIA STATE