AN EVALUATION OF COMPANY’S PERFORMANCE STRENGTHS AND LIMITATIONS (WEAKNESSES) USING FINANCIAL RATIOS AS A MAJOR TOOL.

May 16, 2014 admin Accounting 0


ABSTRACT
          This research work examines the
analysis and acceptability of financial ratios as a major tool to ascertain
performance, strength and limitations with popular reference to Nestle Nigeria
Plc and Cadbury Nigeria Plc portraying the significant ratio needed.  The management of any organisation among other
tools concentrates more on comparative evaluation a bit to ensure proper
control and high level of performance efficiency of an organization’s this
effect, this study was undergone to evaluate company performance, strength and
limitations using financial ratios as a major tool.
The efficiency of company’s
operations in recording, analyzing, summarizing and interpreting of the
financial statement to derive generalization and conclusion is a function of
ratio analysis.
          Some
literature used, helped in determining the concept of financial ratio as an
indication of performance evaluation classification of financial ratios, impact
of ratio analysis trend analysis, common seize analysis and also the strength
and limitation of financial ratio usage in organisations.
          The mode of research design and methodology was based on
primary and secondary data; the former which uses questionnaire as the means of
collection and chi –square (X2 ) for analyzing the
hypothesis to ascertain corrections and justification of the study.
          The companies used are also based on their 2011 annual
report and accounts for quantitative results, though, financial ratio is not an
end but a means to an end, the findings indicates that financial ratio is a
significant weapon of decision marketing and a good yardstick for measuring the
performance of organisations.
                           



TABLE OF CONTENTS
Title                                                                                             i
Certification                                                                                 ii
Dedication                                                                                   iii
Acknowledgements                                                                     iv
Abstract                                                                                       vii
Table of Content                                                                          ix
CHAPTER ONE                                          
1.0     Introduction
                                                                      1
1.1     Background
of Study                                                         1       
1.2     Objectives
of the Study                                                      4       
1.3.    Statement
of Research Hypothesis                                      5
1.4     Statement
of the Problem                                                   5
1.5     Research
Questions                                                            6
1.6     Scope
and Limitation of the Study                                     7
1.7     Significant
of the Study                                                     9
1.8     Organization
of the Study                                                  9
End Chapter References                                                     11
CHAPTER TWO
2.0     Literature Review                                                               12
2.1.1   Reasons for the Use of Ratios                                            15
2.1.2   Limitation
of Accounting Ratios                                        16
2.1.3   Ratio
Analysis Approaches                                                17
2.1.4   Historical Background Of
Nestle Nigeria Plc                      18
2.1.5   Historical
Background Of Cadbury Nigeria Plc                  20
2.2     Conceptual Explanations                                                    22
2.2.1   Types of Financial Ratio
Activities                                     26
2.2.2   Liquidity Ratio                                                                   30
2.2.3   Long Term Solvency or Debt Ratio                                    33
2.2.4   Activity Ratio                                                                     35
2.2.5   Users of Financial Ratios                                                   37
2.2.6   Objectives of Ratio Analysis
to Manufacturing Company  39
          End
of Chapter References                                                66
CHAPTER THREE
3.0     Research Methodology                                                       68
3.1     Introduction
                                                                      68
3.2     Method
of Data Collection                                           70
3.3     Source
of Data Collection                                                  70
3.4     Method
of Analysis                                                            71
3.5     Research
Instrument                                                          71
3.6     Description of the
Population And Sample of the Study    72
3.7     Re
– Statement of Research Questions                               73
3.8     Restatement
of Research Hypothesis                                  74
3.9     Description
of Questionnaire                                             74
3.10    Method
of Data Analysis And Description of Tools of  
          Analysis                                                                             75
          End
of Chapter References                                                77
CHAPTER FOUR
4.0     Data
Analysis Interpretation And Discussion Or Findings 78
4.1     Interpretation
of Items                                                       78
4.2     Analysis
of Data                                                                 79
4.3     Test
of Hypothesis                                                             97
          End
of Chapter References                                                103
CHAPTER FIVE
5.0     Summary, Conclusion,
Recommendation and Suggestions
          For Further Studies                                                                 104
5.1     Summary                                                                           104
5.2          
Conclusion                                                                        105
5.3          
Recommendations                                                             107
5.4          
Suggestions
For Further Studies                                        109
Bibliography                                                                      110
Internet                                                                              111
Appendix                                                                          
Questionnaire                                                         
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