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ANALYSIS OF FINANICAL STATEMENTS AS AN AID TO MEANINGFUL INVEST DECISION MAKING

ANALYSIS OF FINANICAL STATEMENTS AS AN AID TO MEANINGFUL INVEST DECISION MAKING

(A CASE STUDY OF INVESTMENT FIRMS IN ENUGU STATE)

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THE NATURE AND CONSEQUENCES OF JUVENILE DELINQUENCY IN NIGERIA: A STUDY OF ENUGU NORTH LGA, ENUGU STATE
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ABSTRACT

 

          The purpose of this research project was to find out how financial statement analysis service of our aid to meaning decision by investment firms in Enugu state.  Financial statement analysis are used by investment firms to make their investment decisions.  They are also used by management to make their decisions.  Some of the ratio commonly computed by investment firms are profitability ratios, liquidity ratios.  Market value ratios leverage ratios and ordinary share ratios.

This research project was embarked on because most investment firms do not implement meaningful decision that will enhance their meaningful opportunities.  Moreover, most investment firms do not study investment opportunities as to understand the risk associated with investment proposals as to make meaningful decision based on that before investing their resources.

The methodology used in this work include subheadings like research decision, sampling procedure, data collection and method of data analysis as well as statistical tool of analysis.

The method of research design that was adopted in this study is the sample survey through the administering of questionnaire to investment firms.  I was discovered that making investment decisions using financial statements analysis would very significantly with the profitability of the investment firms.

This is so because using chi-square to test our hypothesis.  We discovered that the tabular value of 3.841 is less than our calculated value of 7.815.

We equally accepted the second test in the alternative hypothesis which stats that “there is significant relationship between decision computing with chi-square (X2) we had 3.841 while the tabular value is 3.841.

Thirdly, we also accept our alternative hypothesis in our third hypothesis which states that “There is significant relationship between investment decision and investment profitability because from calculated X2 we had 9.483 in the tabular value.

Lastly, we made recommendations to both investors and management in investment firms on how best to utilize financial ratios in making meaningful investment decisions.

 

TABLE OF CONTENTS

 CHAPTER ONE

  • INTRODUCTION


1.1     Statement of Research problems

  • Purpose of the study

  • Research questions

  • Statement of Hypothesis

  • Significance of the study

  • Scope and limitation of study

  • Operational definition of Terms


CHAPTER TWO

  • Review of related literature


2.1     Review of financial statement

  • The profit and loss Account or income statement

  • Notes to the financial statement

  • Balance sheet

  • Statement of source and application of fund

  • Objectives/usefulness of financial statement

  • The need for Analysis of financial statement

  • Ratio analysis

  • Users of Analysis of Financial statement

  • Limitations of financial ratios analysis


 

CHAPTER THREE

  • RESEARCH METHODOLOGY


3.1     Research Design

  • Sampling procedure

  • Data collection

  • Questionnaire

  • Data Analysis Technique and statistical test


 

CHAPTER FOUR

  • PRESENTATION, INTERPRETATION AND ANALYSIS OF DATA


4.1     Questionnaire analysis

  • Statistical test of the hypothesis

  • Testing hypothesis


 

CHAPTER FIVE

  • SUMMARY OF FINDINGS, RECOMMENDATION AND CONCLUSION


5.1     Summary of findings

  • Recommendation

  • Conclusion


SAMPLE QUESTIONNAIRE

BIBIOGRAPHY

CHAPTER ONE


 

 

  • INTRODUCTION


Decision making is not the core of every investment activity.  A decision is a choice between two or more alternatives.  The implementation of meaningful decision gives way for achievement of investment goals and objectives while implementation of wrong decision positively give rise to investment failure.

The ultimate objectives for investment are profit maximization and growth thus it becomes necessary that capital decision have to be made and implemented so as to achieve the aforementioned objectives.

For a meaningful decision that will be used in these objective for an investment to be made available, analysed and studied and through what is derived, decision is made and implemented wither for action, execution or corrective measures where necessary.

One of the important information needed about investment is concerned with financial aspect and the record that contains the financial aspect of an investment is what is referred to as analysis of financial statement referred to as analysis of financial statement analysis.

According to financial statement analysis and interpretation for alert investors by C. Chinelo Ikoku, financial statement components are as follows:

  1. The chairman board of directors report

  2. The auditor’s report

  3. Graphs and figures.

  4. Table of accounting date.


Financial analysis via ratios hence it is sometimes referred to as ratio analysis or accounting ratios analysis interpreting investigation into financial statement.  The ratios derived from financial statements are used in three different ways namely:

  1. Structural analysis

  2. Time series analysis

  3. Gross sectional analysis.


For investment executions, decision such as buy, certain or sell are necessary.  Equally, decision for evaluating management performance, as well as current and future level of risk and profitability is all important.  Meaningful decision in all the above mentioned areas will help for a good choice among available portfolio of assets, dividend yield, total return as well as liquidity.

In this project study, concentration will be based on such financial ratio as:

  1. Profitability ratio

  2. Liquidity ratio

  3. Asset management ratio

  4. Market value ratio


 

1.1     STATEMENT OF THE RESEARCH PROBLEMS

          Many investors are know to have entered into investment ventures without property understanding such investment opportunity, thus making and implementing wrong decision thereby ending up in folding up when the  going proved impossible.  At times when the investment activities go on, the aim for such action not realized.

Investment failures have equally been identified with poor management, which arises as a result of mobility of the management of such investment firms in making meaningful decisions required for such investment opportunity.

Many investment are carried out without emphasis laid on those investments that would generate profitable returns in the future, the risk involved and the benefits to be derived if embarked upon given the scare financial

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