THE USE OF ACCOUNTING INFORMATION IN ANALYSING THE FINANCIAL POSITION OF A FIRM (A CASE STUDY OF CAP NIGERIA PLC)
THE USE OF ACCOUNTING INFORMATION IN ANALYSING THE FINANCIAL POSITION OF A FIRM
(A CASE STUDY OF CAP NIGERIA PLC)
ABSTRACT
The purpose of this work is to use accounting information in analyzing the financial position of a firm. The work w as written after a careful research and review of accounting information. The uses and users and its application in analyzing the financial position of a firm taking chemical and allied product (APPCC) as a case study.
The researcher was inspired by the preponderance of business failure in the preponderance of business failure in the economy, most of these have been due to wrong analysis, interpretation and application of financial statement 5 that 5 the balance sheet and the profit and loss account, for the purpose of through coverage of the topic under discussion. This study comprises of five chapters. The first chapter dealt an introduction of the crucial issues.
Chapter two covered a review of related literature on the subject and
Chapter three is on research methodology used in the study both primary and secondary data collection.
Chapter four focused on data presentation and analysis data were collected computed analyzed and presented using tables.
Chapter five dealt with summary of findings, recommendation and conclusion on completion of this study among other things is that Chemical and Allied Product Plc should conjure to make use of toward ratios in analyzing the financial position of their firm and also make use of questionnaire
CHAPTER ONE
INTRODUCTION
CHAPTER TWO
REVIEW OF RELATED LITERATURE
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
CHAPTER FOUR
DATE PRESENTATION AND ANALYSIS
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSION ANMD RECOMMENDATION
5.1 FINDINGS
5.2 CONCLUSION
5.3 RECOMMENDATIONS
BIBLIOGRAPHY
APPENDIX (QUESTIONNAIRE)
CHAPTER ONE
INTRODUCTION
According to Harison (1995) Accounting information is a financial data about business transaction expressed in terms of money. Transaction refers to both internal and external transactions that constitute the inputs of the accounting information system.
Accounting uses words and symbols to communicate financial information to manager, investors, creditors and other decision makers, accounting information is not limited to those engaged directly in business. Infact most adults deal with their financial thereby giving accounting a significance roe in society.
Business managers need information provided by the accounting system to plan and control their business activities, in addition investors, creditors and government agencies need financial information to make investing, handing, regulatory and tax related decision, if accounting information is to be useful, it must be expressed in terms of a common denominator, so that the effect of transaction can be combined.
Every business entity should provide information about its activity because the stakeholders, such as shareholder, brand holders, barkers, lenders, suppliers, employees, management, trade contacts, government, financial analyst and advisor all need to monitor how well their interest are being served. They rely on the periodic financial statement of business enterprises to provide the basic information on the profitability of the business. The financial position of a firm is very important to know, if they are making expected turnover. It is also important in achieving attractive returns and sustainable growth on shareholders investments.
Virtually all profit. Seeking organization and most non- profits organization maintain extensive accounting records one reasons is that these records are often required by law. A more basic reason is that, even in a very small organization, a manager is confronted with a multitude of complex variables. Not even the most brilliant manager can be sufficiently informed just by observing daily operations. Instead, he or she must depend on the accounting process to convert business transactions into useful statically data that can be abstracted and summarized in accounting reports.
In every sense, thin process is essential to the co-ordinate and rational management of most organizations-regardless of their size. Thus, a large portion of the information that a business manager requires is derived from accounting data. The ability to analyses and use the data helps managers accomplish you discover the types of business achieve that can be accounted for usefully, the method used to collect accounting data and the implications of the resulting information. Furthermore and often just as important you will become aware of the limitation of accounting reports.
1.1. STATEMENT OF PROBLEMS
The problems that will be encountered in using the accounting information in analyzing the financial position of a firm include the following:
1.3 PURPOSE OF THE STUDY
The purpose of the study means the reasons why the study or research is being carried out. However the objective or purpose of thin study include the following:
1.3. SIGNIFICANCE OF THE STUDY
The significance also means what study in expected to slow at the end of the research work or expected to be gained from once work. The significance of this study is therefore:
To show that the relevance of accounting information should be thoroughly explained and understood and also to show importance of comparing to analyze their growth and the financial position through the use of accounting information.
1.4 STATEMENT OF HYPOTHESIS
The following hypothesis will be tested. They are stated in Null hypothesis.
The company has been adopting proper accounting policy.
The company has been employing credit facility in the sale of its product.
1.5 SCOPE OF THE STUDY
This study does not dwell on the truth or otherwise of advantages and disadvantages or accounting information to analyze the financial position of a firm, but is structure in such a way to explain the actual uses of accounting information by both the private and public sectors for analyzing the financial position of a firm using study of chemical and product (APPLC).
1.6 LIMITATION OF THE STUDY
Research works in Nigeria especially when adopting interview approaches are best with a lot of limitations, which include mass illiteracy, prejudice against the researcher and secrecy. Many of these limitations where expensed in the course of thin study, the research in carried out at Lagos, Enugu and Abia, it also be limited to annual reports of chemical and allied product Plc.
1.7 DEFINITION OF TERMS
For proper understanding of the financial information the following definition of terms are provided.
BALANCE SHEET: Sometime called the statement of financial position, lists the company’s assets, liabilities and stockholder equity (including collar amounts) as of a specific moment in time. A balance sheet is like a still photograph. It captures the financial position of a company at a particular point in time. As you study about the assets, liabilities and stockholders equity. Contained in a balance sheet. You will understand why this financial statement provides in formation about the solvency of the business.
ASSEST- Are things of value owned by the business they are also called the resources of the business? Asset may take many forms. Some assets such as hand and building and equipment may have readily identifiable characteristics. Others may simply represented claims for payment or services, such as amounts due from customers (account receivable) or prepayment for services example prepaid insurance.
As a convenience to the reader of the balance sheet, the asset are usually listed in an established order with the most liquid assets, cash, receivables, suppliers and so on preceding the more permanent assets, land, building and equipment.
Assets are usually recorded at their acquisition prices or cost. The recorded cost of assets may be reduced for a variety of reasons. Supplies are used up and assets such as building and equipment depreciate.
LIABILITIES- Are the obligations or debts that he firm must pay in money or service at some time in the future. They therefore represent creditor claim on the firms’ assets. Liabilities are listed on the balance sheet in the order that they will come due. Short-term liabilities such as noted payable given four money borrowed for relatively short period accounts payable to creditors and salaries owed employed are shown first.
INCOME STATEMENT- Sometime called an earnings statement, reports the [profitability of a business organization for a stated period of time. In accounting profitability is measure for a period of time. Such as a month or years by comparing the revenues generated with the expenses incurred to produce these revenues.
CASH FLOW STATEMENTS- Is a basic financial statement that summarizes information about the flow of cash into and out of a company. The statement of cash flows complements the balances sheets and the income statement. The balance sheet reports the company’s financial position at a point in time while statement of cash flows explains the change in one component of financial position. Cash from one balance sheet date to the next. The income statement reveals the results of the company’s operating activities for the period and these operating activities are a major contributor to the change in cash reported in the statement of cash flows.
VALUE ADDED STATEMENT
It reports the wealth created by a firm during the period covered by financial statements. It usually shows how the wealth created is distributed among various interest groups. Thus, the statement reports the claims of social and economic group re-affirming the contemporary belief that from do not exists for the benefit of other owners only but also for the society at large.
FIVE YEARS FINANCIAL SUMMARY
This endless an instant comparison over a period of vital information about a firm particularly with regard to its.
Turnover- individuals reserves profit before tax and after tax- assets employed issued and paid up capita medium, and long-term liabilities.
Trainings and dividends per share.
The financial statement of a firm should state:
FIXED ASSETS
Land, building, plant and equipment, accumulated depreciation. Other long-term assets- investment and debts intangible assets like good null, patents, trade marks, deferred charges.
CURRENT ASSETS
Stock, trade debts, prepayments, sundry debtors, director’s debts balance, cash and bank balances.
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COMPLETE MATERIAL COST N2,500 Or $10. FRESH PROJECT MATERIAL COST 50,000 NAIRA FOR UNDERGRADUATE, OTHERS 100,000 -200,000 NAIRA.
THE NATURE AND CONSEQUENCES OF JUVENILE DELINQUENCY IN NIGERIA: A STUDY OF ENUGU NORTH LGA, ENUGU STATE
Foreign Transaction For Dollars Payment :
Bank Name: GTBank
Branch Location: Enugu State,Nigeria.
Account Name: Chi E-Concept Int’l
Account Number: 0117780667.
Swift Code: GTBINGLA
Dollar conversion rate for Naira is 175 per dollar.
ATM CARD: YOU CAN ALSO MAKE PAYMENT USING YOUR ATM CARD OR ONLINE TRANSFER. PLEASE CONTACT YOUR BANK SECURITY FOR GUIDE ON HOW TO TRANSFER MONEY TO OTHER BANKS USING YOUR ATM CARD. ATM CARD OR ONLINE BANK TRANSFER IS FASTER FOR QUICK DELIVERY TO YOUR EMAIL . OUR MARKETER WILL RESPOND TO YOU ANY TIME OF THE DAY. WE SUPPORT CBN CASHLESS SOCIETY.
OR
PAY ONLINE USING YOUR ATM CARD. IT IS SECURED AND RELIABLE.
form>DELIVERY PERIOD FOR BANK PAYMENT IS LESS THAN 24 HOURS
CALL OUR CUSTOMERS CARE OKEKE CHIDI C ON : 08074466939,08063386834.
AFTER PAYMENT SEND YOUR PAYMENT DETAILS TO
08074466939 or 08063386834, YOUR PROJECT TITLE YOU WANT US TO SEND TO YOU, AMOUNT PAID, DEPOSITOR NAME, UR EMAIL ADDRESS,PAYMENT DATE. YOU WILL RECEIVE YOUR MATERIAL IN LESS THAN 2 HOURS ONCE WILL CONFIRM YOUR PAYMENT.
WE HAVE SECURITY IN OUR BUSINESS.
(A CASE STUDY OF CAP NIGERIA PLC)
ABSTRACT
The purpose of this work is to use accounting information in analyzing the financial position of a firm. The work w as written after a careful research and review of accounting information. The uses and users and its application in analyzing the financial position of a firm taking chemical and allied product (APPCC) as a case study.
The researcher was inspired by the preponderance of business failure in the preponderance of business failure in the economy, most of these have been due to wrong analysis, interpretation and application of financial statement 5 that 5 the balance sheet and the profit and loss account, for the purpose of through coverage of the topic under discussion. This study comprises of five chapters. The first chapter dealt an introduction of the crucial issues.
Chapter two covered a review of related literature on the subject and
Chapter three is on research methodology used in the study both primary and secondary data collection.
Chapter four focused on data presentation and analysis data were collected computed analyzed and presented using tables.
Chapter five dealt with summary of findings, recommendation and conclusion on completion of this study among other things is that Chemical and Allied Product Plc should conjure to make use of toward ratios in analyzing the financial position of their firm and also make use of questionnaire
CHAPTER ONE
INTRODUCTION
- STATEMENT OF PROBLEMS
- PURPOSE OF THE STUDY
- SIGNIFICANCE OF THE STUDY
- STATEMENT OF HYPOTHESIS
- SCOPE OF THE STUDY
- LIMITATION OF THE STUDY
- DEFINITION OF TERMS
CHAPTER TWO
REVIEW OF RELATED LITERATURE
- DEFINITION OF ACCOUNTING INFORMATION
- USES OF ACCOUNTING INFORMATION
- USERS OF ACCOUNTIGN INFORMATION
- HISTORICAL BACKGROUND OF CAP PLC
- ACCOUNTING POLICIES, CONCPETS METHOD AND BASES
- THE NIGERIAN ACCOUNTING STANDARD BOARD.
- CONCEPT OF FINANCIAL RATIO
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
- RESEARCH DESIGN
- SOURCES OF DATA
- SAMPLE USED
- METHOD OF DATA ANALYSIS
CHAPTER FOUR
DATE PRESENTATION AND ANALYSIS
- DATA PREENTATION AND ANAYSIS
- TEST OF HYPOTHESIS
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSION ANMD RECOMMENDATION
5.1 FINDINGS
5.2 CONCLUSION
5.3 RECOMMENDATIONS
BIBLIOGRAPHY
APPENDIX (QUESTIONNAIRE)
CHAPTER ONE
INTRODUCTION
According to Harison (1995) Accounting information is a financial data about business transaction expressed in terms of money. Transaction refers to both internal and external transactions that constitute the inputs of the accounting information system.
Accounting uses words and symbols to communicate financial information to manager, investors, creditors and other decision makers, accounting information is not limited to those engaged directly in business. Infact most adults deal with their financial thereby giving accounting a significance roe in society.
Business managers need information provided by the accounting system to plan and control their business activities, in addition investors, creditors and government agencies need financial information to make investing, handing, regulatory and tax related decision, if accounting information is to be useful, it must be expressed in terms of a common denominator, so that the effect of transaction can be combined.
Every business entity should provide information about its activity because the stakeholders, such as shareholder, brand holders, barkers, lenders, suppliers, employees, management, trade contacts, government, financial analyst and advisor all need to monitor how well their interest are being served. They rely on the periodic financial statement of business enterprises to provide the basic information on the profitability of the business. The financial position of a firm is very important to know, if they are making expected turnover. It is also important in achieving attractive returns and sustainable growth on shareholders investments.
Virtually all profit. Seeking organization and most non- profits organization maintain extensive accounting records one reasons is that these records are often required by law. A more basic reason is that, even in a very small organization, a manager is confronted with a multitude of complex variables. Not even the most brilliant manager can be sufficiently informed just by observing daily operations. Instead, he or she must depend on the accounting process to convert business transactions into useful statically data that can be abstracted and summarized in accounting reports.
In every sense, thin process is essential to the co-ordinate and rational management of most organizations-regardless of their size. Thus, a large portion of the information that a business manager requires is derived from accounting data. The ability to analyses and use the data helps managers accomplish you discover the types of business achieve that can be accounted for usefully, the method used to collect accounting data and the implications of the resulting information. Furthermore and often just as important you will become aware of the limitation of accounting reports.
1.1. STATEMENT OF PROBLEMS
The problems that will be encountered in using the accounting information in analyzing the financial position of a firm include the following:
- That the users of accounting information are not adequately informed.
- People that use the accounting information do not understand the information given.
- That the accounting bodies do not follow the proper guidelines and rules.
1.3 PURPOSE OF THE STUDY
The purpose of the study means the reasons why the study or research is being carried out. However the objective or purpose of thin study include the following:
- To find out if the proper accounting policies and concepts are followed in CAP PLC.
- To show the important of accounting information to the users.
- To investigate the extent of use of accounting information.
- To show the ability of CAP PLC to generate income.
- Finally to analyze the financial position of CAP PLC. Using the accounting information supplied in the annual reports.
1.3. SIGNIFICANCE OF THE STUDY
The significance also means what study in expected to slow at the end of the research work or expected to be gained from once work. The significance of this study is therefore:
To show that the relevance of accounting information should be thoroughly explained and understood and also to show importance of comparing to analyze their growth and the financial position through the use of accounting information.
1.4 STATEMENT OF HYPOTHESIS
The following hypothesis will be tested. They are stated in Null hypothesis.
- The chemical and Allied product company has not been adopting proper accounting policy.
The company has been adopting proper accounting policy.
- The chemical and Allied product company has not been employing credit in the sale of its product.
The company has been employing credit facility in the sale of its product.
1.5 SCOPE OF THE STUDY
This study does not dwell on the truth or otherwise of advantages and disadvantages or accounting information to analyze the financial position of a firm, but is structure in such a way to explain the actual uses of accounting information by both the private and public sectors for analyzing the financial position of a firm using study of chemical and product (APPLC).
1.6 LIMITATION OF THE STUDY
Research works in Nigeria especially when adopting interview approaches are best with a lot of limitations, which include mass illiteracy, prejudice against the researcher and secrecy. Many of these limitations where expensed in the course of thin study, the research in carried out at Lagos, Enugu and Abia, it also be limited to annual reports of chemical and allied product Plc.
1.7 DEFINITION OF TERMS
For proper understanding of the financial information the following definition of terms are provided.
BALANCE SHEET: Sometime called the statement of financial position, lists the company’s assets, liabilities and stockholder equity (including collar amounts) as of a specific moment in time. A balance sheet is like a still photograph. It captures the financial position of a company at a particular point in time. As you study about the assets, liabilities and stockholders equity. Contained in a balance sheet. You will understand why this financial statement provides in formation about the solvency of the business.
ASSEST- Are things of value owned by the business they are also called the resources of the business? Asset may take many forms. Some assets such as hand and building and equipment may have readily identifiable characteristics. Others may simply represented claims for payment or services, such as amounts due from customers (account receivable) or prepayment for services example prepaid insurance.
As a convenience to the reader of the balance sheet, the asset are usually listed in an established order with the most liquid assets, cash, receivables, suppliers and so on preceding the more permanent assets, land, building and equipment.
Assets are usually recorded at their acquisition prices or cost. The recorded cost of assets may be reduced for a variety of reasons. Supplies are used up and assets such as building and equipment depreciate.
LIABILITIES- Are the obligations or debts that he firm must pay in money or service at some time in the future. They therefore represent creditor claim on the firms’ assets. Liabilities are listed on the balance sheet in the order that they will come due. Short-term liabilities such as noted payable given four money borrowed for relatively short period accounts payable to creditors and salaries owed employed are shown first.
INCOME STATEMENT- Sometime called an earnings statement, reports the [profitability of a business organization for a stated period of time. In accounting profitability is measure for a period of time. Such as a month or years by comparing the revenues generated with the expenses incurred to produce these revenues.
CASH FLOW STATEMENTS- Is a basic financial statement that summarizes information about the flow of cash into and out of a company. The statement of cash flows complements the balances sheets and the income statement. The balance sheet reports the company’s financial position at a point in time while statement of cash flows explains the change in one component of financial position. Cash from one balance sheet date to the next. The income statement reveals the results of the company’s operating activities for the period and these operating activities are a major contributor to the change in cash reported in the statement of cash flows.
VALUE ADDED STATEMENT
It reports the wealth created by a firm during the period covered by financial statements. It usually shows how the wealth created is distributed among various interest groups. Thus, the statement reports the claims of social and economic group re-affirming the contemporary belief that from do not exists for the benefit of other owners only but also for the society at large.
FIVE YEARS FINANCIAL SUMMARY
This endless an instant comparison over a period of vital information about a firm particularly with regard to its.
Turnover- individuals reserves profit before tax and after tax- assets employed issued and paid up capita medium, and long-term liabilities.
Trainings and dividends per share.
The financial statement of a firm should state:
- The name of the firm.
- The period of the time covered
- A brief description on its activities.
- Its relationship with its significant local and over seas supplier.
FIXED ASSETS
Land, building, plant and equipment, accumulated depreciation. Other long-term assets- investment and debts intangible assets like good null, patents, trade marks, deferred charges.
CURRENT ASSETS
Stock, trade debts, prepayments, sundry debtors, director’s debts balance, cash and bank balances.
Download our android mobile app for more materials
ORDER NOW
COMPLETE MATERIAL COST N2,500 Or $10. FRESH PROJECT MATERIAL COST 50,000 NAIRA FOR UNDERGRADUATE, OTHERS 100,000 -200,000 NAIRA.
THE NATURE AND CONSEQUENCES OF JUVENILE DELINQUENCY IN NIGERIA: A STUDY OF ENUGU NORTH LGA, ENUGU STATE
MAKE YOUR PAYMENT INTO ANY OF THE FOLLOWING BANKS:
GTBANK
Account Name : Host Link Global Services Ltd
ACCOUNT NUMBER: 0138924237
Account Name : Host Link Global Services Ltd
ACCOUNT NUMBER: 0138924237
First Bank:
Account Name: Chi E-Concept Int’l
Account Name: 3059320631
Account Name: Chi E-Concept Int’l
Account Name: 3059320631
Foreign Transaction For Dollars Payment :
Bank Name: GTBank
Branch Location: Enugu State,Nigeria.
Account Name: Chi E-Concept Int’l
Account Number: 0117780667.
Swift Code: GTBINGLA
Dollar conversion rate for Naira is 175 per dollar.
ATM CARD: YOU CAN ALSO MAKE PAYMENT USING YOUR ATM CARD OR ONLINE TRANSFER. PLEASE CONTACT YOUR BANK SECURITY FOR GUIDE ON HOW TO TRANSFER MONEY TO OTHER BANKS USING YOUR ATM CARD. ATM CARD OR ONLINE BANK TRANSFER IS FASTER FOR QUICK DELIVERY TO YOUR EMAIL . OUR MARKETER WILL RESPOND TO YOU ANY TIME OF THE DAY. WE SUPPORT CBN CASHLESS SOCIETY.
OR
PAY ONLINE USING YOUR ATM CARD. IT IS SECURED AND RELIABLE.
form>DELIVERY PERIOD FOR BANK PAYMENT IS LESS THAN 24 HOURS
CALL OUR CUSTOMERS CARE OKEKE CHIDI C ON : 08074466939,08063386834.
AFTER PAYMENT SEND YOUR PAYMENT DETAILS TO
08074466939 or 08063386834, YOUR PROJECT TITLE YOU WANT US TO SEND TO YOU, AMOUNT PAID, DEPOSITOR NAME, UR EMAIL ADDRESS,PAYMENT DATE. YOU WILL RECEIVE YOUR MATERIAL IN LESS THAN 2 HOURS ONCE WILL CONFIRM YOUR PAYMENT.
WE HAVE SECURITY IN OUR BUSINESS.
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