The Business Of Financial Ratios As A Tool Of Evaluating The Performance Of Companies For Investment Decision

ABSTRACT

Risks and uncertainties are factors, which a business must face so long as it remains a going concern. Thus to avoid the effect of such risks and uncertainties, management and other potential businessmen are advised to adopt the tool of financial ratios. 

The financial ratios will expose the position of the business in terms of performance and efficiency of operations. They show whether the management are efficient or inefficient in utilization of resources such as capital, assets labor etc.

This project work is aimed at highlighting usefulness of financial ratios as a tool of evaluating the performance of companies for investment decision.

Chapter one (the introduction) will explain the meaning of financial ratios, it will go further to state the purpose of the study, it significance, scope as well as definition of terms with respect of financial analysis.

Chapter two will deal with the literature review. Then the study of background of topic will be equally highlighted. Explanation of selected financial ratios will also be shown.

Coming to chapter three, the techniques of collection of data and data analytical tool to be used will be described here. The techniques for collection of data will include the questionnaire sources. The data analytical tools to be used as percentage size analysis and chi-square.

Chapter four shows the analysis of the data collected.

Finally, in chapter five, the findings be made will be stated, followed by recommendation to ensure effective and efficient use of financial ratios by users for investment decisions. Finally the conclusion will inform readers or users that usefulness or benefits of financial ratios in evaluating performance of companies for investment decision cannot be over emphasized and that if neglected, the shareholders or investors will not know their position or fate in companies.

 

TABLE OF CONTENT

Title page

Approval page

Dedication

Acknowledgement

Abstract

Table of content.

CHAPTER ONE

1.1Introduction

1.2Purpose of study

1.3Significant of study

1.4Statement of problem

1.5Statement of hypothesis

1.6Scope and limitation of study

1.7Definition of terms.

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 Importance of financial ratios

2.2 Users of financial ratios

2.3 Reliability of financial ratios

2.4 Limitations of financial ratios

2.5 Computation of financial ratios

2.6 Explanation of selected financial ratios

2.7 Final consideration in financial statement analysis.

CHAPTER THREE

RESEARCH DESIGN AND METHODOLOGY

3.1 Sources of data

3.2 Sample to be used.

 3.3 Methods or system of investigation.

CHAPTER FOUR.

DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1 Data analysis

4.2 Test of hypothesis

4.3 Summary of ratio.

CHAPTER FIVE

Summary Of Findings, Conclusion And Recommendation

5.1 Findings

5.2 Recommendation

5.3 Conclusion

Bibliography

Appendix