Business Of Financial Ratios As A Tool Of Evaluating The Performance Of Companies For Investment Decision
Risks and uncertainties are factors, which a business must face so long as it remains a going concern. Thus to avoid the effect of such risks and uncertainties, management and other potential businessmen are advised to adopt the tool of financial ratios.
The financial ratios will expose the position of the business in terms of performance and efficiency of operations. They show whether the management are efficient or inefficient in utilization of resources such as capital, assets labor etc.
This project work is aimed at highlighting usefulness of financial ratios as a tool of evaluating the performance of companies for investment decision.
Chapter one (the introduction) will explain the meaning of financial ratios, it will go further to state the purpose of the study, it significance, scope as well as definition of terms with respect of financial analysis.
Chapter two will deal with the literature review. Then the study of background of topic will be equally highlighted. Explanation of selected financial ratios will also be shown.
Coming to chapter three, the techniques of collection of data and data analytical tool to be used will be described here. The techniques for collection of data will include the questionnaire sources. The data analytical tools to be used as percentage size analysis and chi-square.
Chapter four shows the analysis of the data collected.
Finally, in chapter five, the findings be made will be stated, followed by recommendation to ensure effective and efficient use of financial ratios by users for investment decisions. Finally the conclusion will inform readers or users that usefulness or benefits of financial ratios in evaluating performance of companies for investment decision cannot be over emphasized and that if neglected, the shareholders or investors will not know their position or fate in companies.32
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Title page ii
Approval page iii
Dedication iv
Acknowledgement v
Abstract vii
Table of content. ix
CHAPTER ONE
1.1 Introduction 1
1.2 Purpose of study 5
1.3 Significant of study 6
1.4 Statement of problem 7
1.5 Statement of hypothesis 9
1.6 Scope and limitation of study 9
1.7 Definition of terms. 9
CHAPTER TWO
REVIEW OF RELATED LITERATURE 13
2.1 Importance of financial ratios 13
2.2 Users of financial ratios 15
2.3 Reliability of financial ratios 19
2.4 Limitations of financial ratios 19
2.5 Computation of financial ratios 22
2.6 Explanation of selected financial ratios 22
2.7 Final consideration in financial statement analysis. 28
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY 33
3.1 Sources of data 33
3.2 Sample to be used. 34
3.3 Methods or system of investigation. 34
CHAPTER FOUR.
DATA PRESENTATION, ANALYSIS AND INTERPRETATION 37
4.1 Data analysis 37
4.2 Test of hypothesis 49
4.3 Summary of ratio. 54
CHAPTER FIVE
Summary Of Findings, Conclusion And Recommendation 59
5.1 Findings 59
5.2 Recommendation 61
5.3 Conclusion 62
Bibliography 63
Appendix 69
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