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

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

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

  • Conclusion 105
  • Recommendations 107
  • Suggestions For Further Studies 109

Bibliography                                                                  110

Internet                                                                          111

Appendix

Questionnaire

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