RATIO ANALYSIS AS A TOOL FOR PERFORMANCE APPRAISAL IN NIGERIA FINANCIAL MARKET
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TITLE PAGE
RATIO ANALYSIS AS A TOOL FOR PERFORMANCE APPRAISAL IN NIGERIA FINANCIAL MARKET
BY
---
EE/H2013/01430
DEPARTMENT OF ----
SCHOOL OF ---
INSTITUTE OF ---
DECEMBER,2018
APPROVAL PAGE
This is to certify that the research work, "ratio analysis as a tool for performance appraisal in nigeria financial market" by ---, Reg. No. EE/H2007/01430 submitted in partial fulfillment of the requirement award of a Higher National Diploma on --- has been approved.
By
--- . ---
Supervisor Head of Department.
Signature………………. Signature……………….
……………………………….
---
External Invigilator
DEDICATION
This project is dedicated to Almighty God for his protection, kindness, strength over my life throughout the period and also to my --- for his financial support and moral care towards me.Also to my mentor --- for her academic advice she often gives to me. May Almighty God shield them from the peril of this world and bless their entire endeavour Amen.
ACKNOWLEDGEMENT
The successful completion of this project work could not have been a reality without the encouragement of my --- and other people. My immensely appreciation goes to my humble and able supervisor mr. --- for his kindness in supervising this project.
My warmest gratitude goes to my parents for their moral, spiritual and financial support throughout my study in this institution.
My appreciation goes to some of my lecturers among whom are Mr. ---, and Dr. ---. I also recognize the support of some of the staff of --- among whom are: The General Manager, Deputy General manager, the internal Auditor Mr. --- and the ---. Finally, my appreciation goes to my elder sister ---, my lovely friends mercy ---, ---, --- and many others who were quite helpful.
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The objective of this research is to evaluate the extent to which ratio analysis would assist in the financial management of state owned tertiary institutions in Nigeria using Polytechnics in North Central States of Nigeria as a reference point. Specifically, the study aims to ascertain the relationship between the application of ratio analysis and effective management of staff loan schemes, efficacy of internal control processes; management of financial risks; control of frauds and forgeries and financial effectiveness of the management of revenue collection processes. In achieving the objectives of the study, cross sectional survey research design involving the distributions of structured questionnaire was used. This was supported by an ordinary least square model.
Data generated from the survey were analyzed using simple regression model. The significant findings of the study is that effective ratio analysis in tertiary institutions is sin qua non for proper financial management of staff loans schemes in the institutions, increases the efficacy of internal control processes and aids in the early detection of frauds and forgeries in the tertiary institutions. The implications of the findings is that if proper financial evaluation techniques are not employed in the higher institutions frauds and poor internal control mechanisms would triumph. To adequately assess the financial managerial performance of any institution, absolute accounting figures have to be expressed in ratio, which will be used as yardstick for assessment. Based on the findings of this study, it was highly recommended that for management to effectively analyze the financial managerial performance of some key functions of the institutions effective ratio analysis will be helpful as this reflects quantitative relationships and thus helps to form qualitative judgment about the key performance indicators of the organizations.
TABLE OF CONTENT
TITLE PAGE
CERTIFICATION
DEDICATION
ACKNOWLEDGEMENT
TABLE OF CONTENT
CHAPTER ONE
INTRODUCTION 1
- Background of the Study 1
- Statement of the Problem 3
- Justification of the problem 4
- Scope of the Study 5
- Limitation of the Study 6
- Research hypothesis 6
- Plan of the Study 7
- Definition of the Study 8
CHAPTER TWO
- Literature Review 9
- Users of Financial Statement 11
- Management of an Organization 13
- Performance Evaluation 14
- Management control System 15
- Method of Performance Evaluation 16
- Analysis and Interpretation of
Financial Statement 16
- Definition and Relevance of Financial Ratio 17
- Classification of Ratio Analysis 17
CHAPTER THREE
3.0 Research Methodology 23
- Type of Data 23
- Population and Sample Size 24
- Method of Data Collection 24
- Method of Data Analysis 24
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
4.0 Introduction 26
- Socio-Dittographic Characteristic of Respondents 27
- Presentation of Questionnaire Response 30
- Testing of Hypothesis 33
- Result and Analysis of Liquidity Ratios 36
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
- Summary 37
- Recommendation 37
- Conclusion 39
BIBLIOGRAPHY 41
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The amount of proportion of one figure compare to another makes financial statement to be obviously important to enable user have a clear picture of position of organization. It report the liquidity and solvency of the company and the claim of it resources i.e. debt owned, the equity of the owner and present cash position of the company.
It comprises comparative balance sheet, profit and loss account, income statement, cash – flow statement, auditors report and some officer necessary information base on your assessment.
Despite the functions of financial statement many users often fail to comprehend fully on the information it intending to pass across, thus there desire are not met. This is due to ambiguous of the financial statement where by the volume of data figure mislead the user. In this sense, the need for analysis and interpretation of statement are imperative. Financial statement can be converted and interpreted using three techniques.
- Vertical or Static Analysis: It examine relationship within a statement, it deals with use of relative percentage value of the statement.
- Horizontal or Dynamic Analysis: This involves comparison of financial statement in respect of the two or more years. The weakness of this analysis in that comparison with the past does not afford any basis for evaluation in absolute terms.
- Ratio Analysis: Involve the use of two different economic units to ascertain performance. Ratio analysis commonly uses technique in analyzing financial statement. It is obviously paramount since it checks how strong or weak company is. Therefore, its interpretation is easily understood by the user.
1.2 STATEMENT OF THE PROBLEM
Financial ratio analysis it widely use to assess the performance of an enterprises. Financial statement is prepared in terms of historical costs. They do fully reflect economic resources and managerial, hence poor decision may be made. The users of financial information are carried away by the figures display in financial investment. Observing the trends of the financial investment as assess whether their resources have been put to effective use. The analytical comparison of large information is a problem to the user.
Financial ration analysis should be applied to provide meaningful and quantitative presentation of the company and external creditors. Also there is need for financial analyst to produce a small and understandable data for good decision.
1.3 JUSTIFICATION FOR THE STUDY
Ratio analysis been what it is, as the production of relation for internal and external financial reports are important to summarize key relationship and result in order to appraise financial performance.
In its assessment, this research will be of immense value in recent knowledge of enterprises and managerial achievement. This research is very useful to user to supplement the existing knowledge of the user of financial ratio as guide towards the determining company’ achievement as well as show how financial ratio analysis can identify the strength and weakness of a company.
The research work can also serve as material for student who are interested in the study of financial ratio as a tool for performance appraisal.
1.4 SCOPE OF THE STUDY
This study has limited to five year financial summary of the First Bank Nigeria Plc, profit and loss account, the balance sheet, value added statement, using ratio and adequate interpretation.
This study is carryout base on the fact that amount presents a true and fair view of the company’s affairs and not misleading.
More so, financial ratio will be compared with that of previous year using common size of statement trends analysis that is reaction of the economic unit over time of the firm horizontal analysis.
The period was choosing because of the availability of financial statement representing it operation within the period 1999 – 2002.
1.5 LIMITATION OF THE STUDY
In the case carrying out the research the following limitation are encountered.
The major limitation is the high cost of transportation and insufficient fund to other schools library subsequently to this problem is a combination of academic work with represent study. The refusal of asset to the unpublished information, which has been term confidential time factors “the time that was in the conduct of research constituted constrain of the study”
1.6 RESEARCH HYPOTHESIS
For the objective of the study the researcher would want to know the input of ratio analysis as a tool to measure managerial performance to ratio analysis can not serve as a tool for performance appraisal in Nigeria Financial Market.
Hi Ratio analysis can serve as a ratio for measuring profitability and efficiency of a firm while chi-square is used to rest the validity of hypothesis.
1.7 PLAN OF THE STUDY
The research is written to examine financial ratio analysis as a tool for performance appraisal.
The study begin with chapter one that deals with the background of the study, statement of problem, justification of the study and definition of terms. Chapter two deals with the Literature Review of the work of other author related to the research methodology: type of date population and sample size, method of date collection, method of data analysis and brief history of First Bank Nigeria Plc, Chapter four embraces the data presentation and analysis of liquidity ratio chapter five deals with summary, conclusion, recommendation, and bibliography.
1.8 DEFINITION OF TERMS
- Performance: Is the ability to operate efficiently as well as an action or achievement consider in relation to it is Oxford Advance Dictionary.
- Financial Statement: Are the instrument panel of business enterprises and constitute a report on managerial performance arresting to managerial failure or success and flushing warming signal of impending difficulties (Meigs and Meigs 1979)
- Ratio: Is a simple mathematical expression of the relationship of one item to the other
- Balance Sheet: A statement of financial position showing the nature and amount of company asset and liabilities and net worth of a particular company.
- Working Capital: Is the excess of current asset over current liability of a business.
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CHAPTER THREE: The complete chapter three of "ratio analysis as a tool for performance appraisal in nigeria financial market" is available. Order full work to download. Chapter three of "ratio analysis as a tool for performance appraisal in nigeria financial market" consists of the methodology. In this chapter all the method used in carrying out this work was discussed.
CHAPTER FOUR: The complete chapter four of "ratio analysis as a tool for performance appraisal in nigeria financial market" is available. Order full work to download. Chapter four of "ratio analysis as a tool for performance appraisal in nigeria financial market" consists of all the test conducted during the work and the result gotten after the whole work
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