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Product Category: Projects
Product Code: 00001012
No of Pages: 68
No of Chapters: 5
File Format: Microsoft Word
Price :
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TABLE OF CONTENT
Pages
Title Page i
Certification ii
Dedication iii
Acknowledgement iv
Proposal v
Table of Content x
CHAPTER ONE
1.1 Introduction 1
1.2 Historical
of the Organisation 2
1.3 Statement
of the Problems 3
1.4 Research
Questions 4
1.5 Purpose
of the Study 5
1.6 Scope
and Limitation of Study 5
1.7 Significance
of the Study 6
1.8 Definition
of Major Terms 7
CHAPTER TWO
2.0 Literature
Review 8
2.1 Nature
of Ratio Analysis 10
2.2 Standard
of Comparison 11
2.3 Users
of Accounting Ratio 12
2.4 Critical
Review of the type of Ratio 15
2.5 Financial
Norms 23
2.6 Significant
Accounting Policies 24
2.7 Balance
Sheets (Analysis of Financial Statement) 27
2.8 Profit
and Loss Account 28
2.9 Cash Flow Statement 29
CHAPTER THREE
3.0 Research
Methodology 30
3.1 Introduction
30
3.2 Study
Population 30
3.3 Sampling
31
3.4 Data
Collection 31
3.5 Source
of Data 32
3.6 Description
of Questionnaire 33
3.7 Method
of Data Analysis 33
CHAPTER FOUR
4.0 Data
Analysis 34
4.1 Presentation
of Data 34
4.2 Test
of Hypothesis 43
4.3 Steps
in Hypothesis Testing 45
CHAPTER FIVE
5.1 Summary
of Findings 56
5.2 Conclusion 57
5.3 Recommendation 57
Bibliography 60
Questionnaire
62
CHAPTER ONE
1.1 INTRODUCTION
The
Term “Ratio Analysis” could be described as the analysis of financial statement
in order to judge the performance of the COMPANY or group of companies.
The
“Investment Decision” Means the allocation of funds to invest proposal whose
benefits are to be realized in the future.
The
combination of the two terms described above or the relationship between them
is basically the purpose of this work. That is the impact of ratio analysis as
a tool for investment Decision. The three fundamental statement requires are
the income statement, the balance sheet, and the statement of changes in
financial position. The analysis of these statement combined with the
preparation and analysis of related financial statement are required to as
financial statement analysis.
To
make rational decision in keeping with the objective of a firm, the financial
management his certain analytical tools. The company itself and suppliers of
capital, creditor and investor all undertake financial analysis. The form’s
purpose is not only internal control but also better understanding of what
capital supplier seek in financial condition and performance from it. To
evaluate, the financial analyst needs certain Yardsticks frequently used in
ratio or index relating two pieces of financial data each other. For instance,
the relationship between gross profit and sales is expressed by the accounting
ratio know as gross profit % or gross margin, which is computed as follows.
GROSS PROFIT % = Cross
Profit x 100 = x%
Sales 1
1.2 HISTORY
OF THE ORGANIZATION
The company was incorporated in
The principal activities of the
group are the manufacturing and sales of wide range of consume products and
home appliance. Their products include detergent soap, pharmaceuticals
cosmetics, confectionaries, refrigerators, freezen, Airconditioners, plastic
container and components. The activities which claims about 85 – 90% of
Merchandising.
1.3 STATEMENT OF THE PROBLEMS
Many Businesses all over the
World have met with unit health due to investment decision. This has been
situation more serious in recent time in
i.
General economic
depression in the country.
ii.
Anticipated and
general instability in the political climate.
iii.
Introduction of
second-tier foreign exchange market.
iv.
Ratio computed from
financial statement can base don historical figures which will need further
analysis especially during the period of rising prices.
v.
To much emphasis can
be place on one ratio where as ratio are interdependent and has to be treated
as such.
vi.
Lack of professional
knowledge to interpret the computed ratio.
vii.
Seasonal activities of
business will effect ratio analysis.
However, the basic solution to
over come this problems (investment decision) is how to make the right decision
at the right time through the proper use of ratio analysis in the
interpretation of financial statement, investment decision will be made easy.
The analysis and interpretation
of various ratio should force experience, skilled analyst a better
understanding of financial condition and performance of the firm they would
obtain from analysis of financial data alone.
1.4 RESEARCH QUESTION
A research is the plan, structure and strategy of information
conceived so as to obtain answer to bothering question. To obtain accurate
answer, worthwhile research was carried out, using a number of method, each
complementing the other.
The main primary and secondary data were used: The use of
questionnaires forms the use of primary data. Equally important in the primary
data is the use of interview. Structural questions were issued and conducted in
PZ Industrial Plc in financial/accounts section of the company.
The questionnaires were specifically and systematically designed
for obtaining information from PZ Industrial PLC financial account section to
know the impact of rationalysis of their financial statement has contributed to
the growth of the company.
1.5 PURPOSE OF THE STUDY
i.
To highlight the problems
faced in the use of ratio analysis for investment decision in real business
life.
ii.
To enable users of financial
business statement understand the techniques of analyzing final account
iii.
To analyse and interpret the
trends and ratio of a company.
iv.
To suggest other investment
in practical terms.
v.
To determine companies
contribution to social development
1.6 SCOPE AND LIMITATION OF
STUDY
The scope of the study will cover the uses of ratio analysis with
particular reference to the accounting system in the company.
PZ Nigeria LTD will be thoroughly examined as a case study. the
study shall be limited to the financial accounting segement of accounting.
There are others areas of accounting and such as management accounting,
financial accounting and auditing.
However, the focus in thus study will be in financial accounting
as this the area in which ratio analysis is most significant. Some of the
factor that contributes to the limited of ratio analyses are:-
i.
The problem of currency and
adequacy. Balance sheet items are historical and duration of usefulness is
limited.
ii.
Problems of determining
proper and acceptable basis of comparison.
iii.
Changes in price level
render interpretation of ratio invalid.
iv.
The ratio calculated suffer
set back from short changes.
v.
The comparison made between
different company’s ratio are in accurate because of different in their
policies operation and situation.
1.7 SIGNIFICANCE OF THE
STUDY
i.
It is use to determine the
financial strength and weakness of a company, this allowing for necessary
corrective action.
ii.
Ratio analysis are used in
interpreting the function prospect of the company.
iii.
It can be used to determine
liquidity position of the company.
iv.
It is used in determining
management efficiency in the use of available company resources.
v.
Ratio analysis are used in
determining availability and adequacy of company’s capital.
vi.
It is used in making
positive comparison between past and present operational situation of the
company and obvious projection to the future.
vii.
It will assist interested
investor in their investment decision. In that it will correctly analyse the
gearing solvency and growth potential of the company.
viii.
It will help the management
in evaluating the performance through the comparison of different ratio with
the company’s previous accounting result (trend analysis)
1.8 DEFINITION OF MAJOR
TERMS
The following are the major term uses:
i.
Ratio Analysis: The term
ratio analysis could be described as the analysis of financial in order to
judge the performance of the company or group of companies.
ii.
Investment Decision: The
investment means the allocation of fund to investment proposals whose benefits
are to be realized in the future.
iii.
Financial Analysis: Financial
analysis is an act of evaluation and assessing the financial and operational
strength and weakness of a business firm in order to adequately determine its
efficiency, portability, liquidity and solvency.
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