An Evaluation Of Accounting Ratio As A Measure Of An Organization Performance

Download complete project materials on An Evaluation Of Accounting Ratio As A Measure Of An Organization Performance from chapter one to five

Table of content

Title page

Certification

Dedication

Acknowledgment

List of content

Chapter one

Introduction

Statement of the problem

The aims of the study

The scope and limitation of the study

Significant of the study

Research methodology

Plan of the study

Definition of terms

Chapter two

Literature review

Classification of financial ratios

Reason for interpreting accounts

Limitations of financial statement

Limitations of accounting ratios analysis

Liquidity ratio

Usefulness of liquidity ratio

Profitability ratio

Usefulness of profitability ratio

Long term solvency or debt ratio

Usefulness of long term solvency or debt ratio

Chapter three

Research desig

Population of study

Sampling design and size

Sources of data

Data collection instrument

Validity and reability of data

Statistical tools for data analysis

Organization structure

Chapter four

4.0 data presentation and analysis and interpretating

Analysis of responses to interview

Testing of hypothesis

Computation and interpreting of the five years financial summary

Interpretation of the financial statement

Chapter five

Summary, conclusion and Recommendation

Summary of finding

Conclusion

Recommendation

Bibliography

Questionnair

CHAPTER ONE

INTRODUCTION

Two basic financial statements of importance to owners management and investors are final accounts which comprises balance sheet and profit and loss account.

Balance sheet give a summary of the firms resources and obligation of asset and liabilities at a point in time the profit and loss account reflects the result of the business operation by summary revenue and expenses during a period of time.

The balance sheet and profit and loss account are fact to explain the change in assets, liabilities and owners equity.

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The balance sheet does not indicate the course of change or the movement of finances between two periods, similarly, the changes in owners equity is partly reflected in the profit and loss account, but besides profit owners equity may change due to other factors such as additional statement is needed to show the changes in assets,

liabilities and owners equity between the dates of two balance sheet , such statement is refereed to as “the statements of changes in financial position”.

Users of financial statement can get further insight about financial strength and weakness of the firs if they properly analysis information reports in these statement. Management can also kid down the future plans of the firms in view of the firms financial strength and weakness.

This before any sophisticated forecasting and planning procedure are used, financial analysis is the starting period of making plans. In financial analysis ratios are being applied. Ratio is simply one number expressed in term of another  and to show the relationship between them for example 12 and 3 is simply 12/3 or ratio 4:1. this means that 12 is 4 times greater than 3.

The following are the areas for which ratios are analyzed

1. Evaluation of trading performance of a firm in order to have a measure of quality of management running it
2. Appraisal and monitoring of the constituents of the capital structure and the cost associated with them
3. Comparisons of operations of any entity for two or more years and interpretation of the comparison based on the ratio applied.

STATEMENT OF THE PROBLEM

The average financial manager apart from dividend is so much unaware of other benefits accruable or derivable by him through wide investment.

Also investors who have funds to invest are confuse on how to go about it of course before any rational investment or financial manager can make any decision on investment, he must consider qualitative factors which should by carrying along with decision and the effect of changes in arriving at a new price of their product as a result of unawareness of most financial manager and investors in making decision in relation to ratio analysis. They are affected by this problem which are:

1. Financial analysis based on accounting ratio which given a misleading result if the effect of changes in price level are not taken into account
2. Ratio analysis can not be used to compare result of two or more companies except where they have similar accounting policies.
3. No fixed standard which are laid down for ideal ratio
4. Ratio analysis is meaningless unless interpreted.
5. Using ratio for decision-making means only q qualitative factors are being considered along before carrying out any decision

For any organizational management who are not of how important ratio analysis is to their business will surely encounter these problems discussed above and for any management to carried out it work effectively most have taken into consideration the importance of ration analysis to its business.

THE AIMS OF THE STUDY

The basis aims of this project is to analyze various types of financial rations, their interpretation and these effect of cash on the financial position at a firm, and to also facilitate on the ratio used by business organization in making decision in different situation at a point in time.

This project will emphasize on the evaluation of accounting ration as a measure of organization performance the project will also stress the reason why various activities by business existence of their business. So that the investor will be able to work out each types of financial ratio without emphasizing the service of professional analysis and making decision on how where and when to invest.

THE SCOPE AND LIMITATION OF THE STUDY

This particular project will attempt to disclose and limit it self to the evaluation of accounting ratio as a measure of organization performance. In project two years financial statement profit and loss account and the balance sheet of AFRIBANK PLC will be computed, analyzed, compared and interpreted.

The limitation of the study is that ratio are measure of quality and not measure of quality. However, the qualitative relationship can be used to make and form a qualitative Judgment, which are useful in judging the efficiency of a business only when they are compared with past result of the business.

The major constraint of the research work was unavailability of data, time to conduct additional research

SIGNIFICANT OF THE STUDY

The primary purpose of this research work is therefore to arrange important tools that gives prescriptions which will result in the hearth, vigor and greater happiness to the investors, financial managers, creditors and other users, having recognized the problems encountered by them in making decision on when, how and of course where to invest their resources.

By and large these research work will equip the investor with the knowledge necessary for investment decision making furthermore, it will clarify and correct the wrong ideal that investors are unable to making decision compute and interpreters the financial statement that are often published by companied.

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