TABLE OF CONTENT
Title
page
Dedication
Acknowledgement
Abstract
Table
of content
Chapter
One
1.0
Introduction
1.1
Background of the Study
1.2
Statement of the problem
1.3
Objective of the study
1.4
Research question
1.5
Statement of hypothesis
1.6
Significance of the study
1.7
Scope of the study
1.8
Limitation of the study
1.9
Definition of terms
CHAPTER TWO
2.0
Literature review
2.1
Brief history of
2.2
ratio analysis overview
Uses
of ratio analysis
Various
asset related ratio
Profitability
ratio
Liquidity
ratio
Activity
ratio
Ownership
ratios
Growth
ratio
Limitations
of evaluating ratios
Summary
CHAPTER THREE
3.0
Research design and methodology
3.1
Research design
3.2
Sources/methods of data collection
3.3
Population and sample size
3.4
Sample technique
3.5
Validity and reliability of measuring
3.6
Method of data analysis
CHAPTER FOUR
4.1
Presentation and analysis
4.2
Analysis of data
4.3
Interpretation of result
CHAPTER FIVE
5.0
Summary of findings, conclusion and recommendation
5.1
Summary of findings
5.2
Conclusions
5.3
Recommendation
Bibliography
Questionnaires
Appendix
1
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND
The
business environment is very dynamic and competitive. As a result of this fact,
manager of business organization strive to explored, various ways to enabling
them to meet up with the capriciousness of the contemporary business would also
surmount the devastating competitive attack from rival firms in the same
industry.
It is known fact that the primary
objective of every business entity is to produce and to distribute goods and
services with a view of ensuring profit. According to Bill (1984:360) while
project is not the only goal of any business activity, in spite of the fact
profitability does not exist in a vacuum.
It is the result of the adoption of effective and efficient mode of
operation of an adequate planning and control term. The control function of
management enables a firm to evaluate enables rational decision to made and
corrective actions taken.
Decision making and management are almost
synonymous. According KOTZ and Weihrich (1994-1999) management at times see
decision making as their central job because they must constantly choose what
is to be done and when, where and occasional even how it will be done.
Despite this fact, there is frequency, a
problem as to what information to search for decision making purpose, an
important source of information is aim at communicating to the parties
concerned with the business organization about the effectiveness of the use of
investment in the business and show low efficient the management is in its
activities. Techniques of analysis enable the accounting users to make useful
decision and interpretation of management efficiencies.
1.2 STATEMENT OF PROBLEM
In view of the fact that no business can
operate in isolation of accounting, it suffices to note that accounting
information plays the role of guardian in business activities. Then what role
does accounting ratios play in the business decision making.
What set back will occur it accounting
ratios are inadequately interpreted.
What is the likely effect of not
interpreting financial statement? Lack of adequate interpretation of financial
statement using ratio analysis
1.3 OJECTIVES OF THE STUDY
This research work seeks to find out if
such information can be supplied by ratio analysis in essence. The study seeks
to:
1. establish
whether ratio analysis serve as guid effective decision making
2. Establish
whether ratio analysis is employed in the management decision.
3. established
whether ratio analysis assist in making good investment decision
4. Prove
whether organization should employ accounting ratio when managing the business.
1.4 RESEARCH QUESTION
The following research question where
formatted to enhance ways and effective collection of data.
A. What
impact does accounting ratio have in determining management efficiency?
B. Does accounting ratios reveal the strength and
weakness of a reporting entity?
C. To
what extent do accounting ratio plays role in investment decision?
1.5 STATEMENT OF HYPOTHESIS
Hypothesis
provides an initial point to the flow thought of the research. Basically, the
research seeks to verify the truth or reject it, the hypothesis to be tested in
this research are:
1.
HO: The firm does not adopt ratio analysis in its assets management.
2.
HI: Ratio analysis does not facilitate effective assets management of an
organization.
3.
HI: Ratio analysis is not a good tool for decision making
Hi
Alternative:
HI:
The firm adopts ratio analysis in its assets management
HI:
Ratio analysis facilities asset management of an organization
HI:
Ratio analysis is a good tool for decision making
1.6 SIGNIFICANCE OF THE STUDY
The study will enlighten the reader, the
company, the general public on the impact of accounting ratio in the investment
decision. It has the following significance.
1. To
find out the impact of accounting ratio in investment decision.
2. To know the extent accounting ratio can
influence organization decision making.
3. To
highlight the usefulness of accounting ratio in business decision making.
4. To
find out the extent to which accounting ratio analyses have been used in
solving financial crisis.
5. To
identify the problems to be encountered when interpreting final accounting of a
business entity.
1.7 SCOPE OF THE STUDY
The
research will be based on the definition of accounting and interpretations. The
ways of ratio presentation and application. It will also highlight on the ratio
analysis with a review to show it importance on the business decision making
based on the Nigeria Breweries PLC in Enugu, Enugu state.
1.8 LIMITATION OF STUDY
It is apparent that a study of this kind
will often be limited with some short coming. All the same, the problems that
limit this course of study range from financial problem, unwillingness of the
management to release vital information for fear that it may be used to their
determent.
1.9 DEFINITION OF TERMS.
The following terms in the study are
defined as uses in the work.
1. Accounting Period: -
This is a period covered before an organization account can be prepared. It is
a period when changes in position are measured. It is also known as accounting
years of fiscal year.
2. Assets:
Is a resource control by an entity as result of past event and from which
future economic benefit are expected to flow to the entity. Or what the
business owns, they could be permanent in nature or non permanent.
3. Financial Statement:
This is a summary of figure and facts from the ledger showing the financial
condition of business. It is the final ends of financial accounting.
4. Management:
This is a process of organizing and controlling human activities directed
toward specific ends or objective i.e. use of source (human and material) to
achieve organization goals.
5. Profit:
This is the reward which a entrepreneur or an organization receive from
investment. It is the provision of a particular goods or services.
6. Ratio Analysis:
This is the interpretation of the ratio calculated from the financial statement
for effective decision making
7. Turnover: This
is the gross earning made by a business over a period of time it is income
realized by business in period.