TABLE OF CONTENT
Table of Content v
1.1 BACKGROUND OF THE STUDY 1
1.2 STATEMENT OF THE PROBLEM 4
1.3 OBJECTIVE OF THE STUDY 5
1.4 RESEARCH QUESTION 6
1.5 SIGNIFICANCE OF THE STUDY 7
1.6 SCOPE OF THE STUDY 8
1.7 LIMITATION OF THE STUDY 9
1.8 DEFINITION OF TERMS 9
2.1 PREVIEW 12
2.2 CONCEPTUAL FRAMEWORK OF RATIO ANALYSIS 12
2.3 APPROACHES TO USE OF RATIOS 14
2.4 CLASSIFICATION OR TYPES OF RATIOS 15
2.5 PLACE OF RATIO ANALYSIS IN AN ORGANIZATION
OR FINANCIAL INSTITUTION 22
2.6 EXPECTED ROLE OF MANAGERS IN RATION TO
RATIO ANALYSIS 23
2.7 CONTRIBUTIONS OF INVESTORS TO
ADMINISTRATIVE PERFORMANCE IN TERMS
OF FINANCIAL RATIO ANALYSIS 24
- CONTRIBUTION OF RATIO ANALYSIS IN
DECISION MAKING IN AN ORGANIZATION 25
3.0 RESEARH METHODLOGY 30
3.1 PREAMBLE 30
3.2 POPULATION SIZE 30
3.2 SOURCE OF DATA 31
3.3.1 PRIMARY SOURCE 31
3.3.2 SECONDARY SOURCE 31
3.4 RESEARCH INSTRUMENT 33
3.5 DATA ANALYSIS PROCEDURE 35
4.0 DATA PRESENTATION ANALYSIS AND INTERPRETATION 36
4.1 INTRODUTION 36
4.2 DATA PRESENTATION AND ANALYSIS 37
4.3 COMPUTATION OF SOME SELECTED RATIO USING
THE ZENITH BANK STATEMENT OF ACCOUNT AS
BELOW BALANCE SHEET AS AT DISMEMBERS 31st
4.4 SUMMARY OF FINDINGS 49
SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 SUMMARY 51
5.2 CONCLUSION 52
5.3 RECOMMENDATION 52
1.1 BACKGROUND OF THE STUDY
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 especially in a banking institution like ZENITH BANK.
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 (ZENITH BANK OF AFRICAN).
Zenith Bank was established in May, 1990. It became a
Public Limited Company in July, 2004, and had an initial public offering on the
Nigerian Stock Exchange (NSE) on October, 21 of that year. Also in 2004, credit
rating agency fetch ratings identified its credit as AA on their long-term
scale. The Bank has been in a series of controversies regarding its labour
practices. The bank developed a penchant for mass terminations of staff
employment without regard to due process. A series of court cases instigated
against the bank by ex-employees adds credence to this view. In 2010, the Bank
was defrauded of about
N7.5Billion by a
staff and was made to make provisions for it by Nigeria’s Reserve Bank.
Jim Ovia is the company’s pioneer Chief Executive Officer, Pter Amangbo is the Managing Director, Adaora Umeoji, Ebenezer Onyeagwu and Sola Oladipo are Executive Directors. Jim Ovia is Chairman of the Board. The company has a total of 3,911 employees in January, 2010 the Board of Directors of the Bank announced a change. The Board of Zenith Bank Plc announced the appointment of Peter Amangbo as Managing Director/Chief Executive Officer designate of the Zenith Bank.
2007: African Bank of the Year (Awarded by African Investor Magazine)
2007: Quoted Company of the Year (Awarded by Nigerian Stock Exchange)
2007: Socially Responsible Bank of the Year (Awarded by African Banker Magazine)
2005: Most Respected Bank in Nigeria (Awarded by Price water house Coopers)
2005: African Bank of the Year (Awarded by the Banker Magazine)
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 ZENITH BANK PLC
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.