THE USEFULNESS OF FINANCIAL STATEMENT IN ASSUASIVE THE PERFORMANCE COMPANIES AND IN GUIDING INVESTMENT DECISIONS

THE USEFULNESS OF FINANCIAL STATEMENT IN ASSUASIVE THE PERFORMANCE COMPANIES AND IN GUIDING INVESTMENT DECISIONS

 

(A CASE STUDY OF SUNRISE FLOUR MILL LTD ENUGU)

 

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ABSTRACT

 

          The use of financial statement in any business organisation cannot be over emphasized financial statements are needed by variety of people for different purposes .  for instance, the government needs the financial books of a company for taxation purposes, the investors want to know how profitable a company is and also the management of a company will like to know the level of their performance: all these cannot be known without the analysis of financial statements of the company or companies involved.

 

The research work therefore, studies the usefulness of financial statements in assessing the performance of companies and in guiding investment decisions, in order to provide investors, management, government and others what the company is worth.

 

TABLE OF CONTENTS

 

CHAPTER ONE

  • Introduction

1.1     Statement of problem

  • objectives of study
  • significance of study
  • research questions
  • scope and limitations
  • formation of hypothesis
  • definition of terms

CHAPTER TWO

  • Review of related literature

2.1     Introduction

  • Basic concepts
  • Further assumptions and principles
  • Benefits of financial statement

 

CHAPTER THREE

  • Research design and methodology

3.1     Source of data

  • Questionnaire
  • Interview method
  • Sample design
  • Method of investigation
  • Statistical method for data analysis

 

CHAPTER FOUR

  • Presentation

4.1     Interpretation of data

  • Testing of hypothesis

 

CHAPTER FIVE

  • Summary, findings, conclusion

5.1     Recommendation

  • Bibliography
  • Appendix – Questionnaire

 

LIST OF TABLE

  1. Trading account
  2. cost of goods sold
  3. statement of changes in financial position of companies
  4. Profit and loss appropriation account schedule profit and loss account for the year suded 31st Dec 1995 and 1996.
  5. analysis of result
  6. analysis of questionnaire respondents
  7. analysis of respondent department
  8. pie chart distribution of respondent department
  9. analysis of responses
  10. analysis of responses
  11. analysis of responses
  12. analysis of responses
  13. test of hypothesis
  14. test of hypothesis 11
  15. test of hypothesis 111
  16. Balance sheet as at 31st December, 199 and 1996.

 

 

 

CHAPTER ONE

 

INTRODUCTION

          A financial statement is defined by accounting standard committee (ASC) as a balance sheet, profit and loss accounts, and statement of source and application of unds, notes and other statements, which collectively are intended to give a true and fair view of the financial position and profit or loss.  Several companies incorporate fixed assets valuations into their balance sheets, in which case the depreciation charge in profit and loss is based on revalued amount.  Some companies draw up their financial statements on a current cost basis, but this is rare compared with the use of historical cost or modified historical cost.

 

A financial statement is part of a company’s annual report, the purpose of which is to communicate information about the company to those who have the right to receive it for instance, the shareholders, in addition to investors, potential investors and other users of financial statements.

 

It provides an indication of company’s trading performance and gives a snapshot of aspects of its financial position at a particular date.  At a minimum, a financial statement consist is of accounting policy, balance sheet, profit and loss portraying organizations and income and expenditure for non-trading organizations, notes to the account, directors report, sources and application of fund and value added statement.  The analysis of financial statement or an account is therefore the interpretation, amplification and translation of facts and financial statements, the purpose is to draw relevant conclusions, therefore, making of inferences as to business operations, financial positions and future prospects.

 

The procedure involves.

  1. analysis of data contained in the financial statement into certain basic component parts. For instance, in carrying out a profit analysis, the net sales is a very important figure and other data in the account like cost of goods sold, gross profit and cost of production are compared with this cove of the income statements.  Similarly, in balance sheet analysis, the cove components are net assets which are usually compared with ones capital, loan stock and working capital.
  2. Translation of those data into cheer and simple form. The translation process may lead to extraction of ratios or percentages that establish relationships between comparable data or even the presentation of graphs and charts.
  3. Drawing relevant conclusions and making inferences concerning the company’s financial position, stability, profitability and solvency.
  4. Presentation of information do obtained to management for decision making. The information is used in the forward process for future controls and policies.  The application of this information will involve the isolation of the factors responsible for the state of affairs which are reveled by the analysis.

 

The analysis could be horizontal or vertical internal or external horizontal analysis is a comparison of data in financial statements of two or more consecutive accounting periods to detect whether performance has improved or not.  Example, the profit of 1994 of a company could be compared with that of 1995, 1996 with 1997 and after which a trend may arise from the analysis.  This analysis is internal as it concerns financial data of one company alone.  A vertical analysis as external s it concerns financial data of one company and another.  That is, external when a comparative study of data between one company’s financial statement and that of another over a given time.

 

It is wholly external and involves a comparative analysis of data in financial statements with in a single period.

By reference to a common unit, data in the financial statements can be compared with one another to determine efficiency of current performance for the purpose of the analysis, certain figures in the accounts are expressed as a percentage of another relevant figure.  In carrying out an analysis of accounts, a number of issues must be considered and conclusions formed therefore.

 

These include.

  1. profitability of the business operations, particularly in relation to capital employed
  2. solvency of the company: the ability of the business to pay its creditors, the adequacy of its working capital and the liquidity of its current assets viewed side by side with the current liabilities.
  3. The business trends: the analysis of the pattern of business over time to determine whether profit is rising or failing, and the implication for futon performance.
  4. The financial stability of the company: paying particular attention to company’s financial position, the limits of its borrowing powers, and available resources to financial expansion and volume of earnings.
  5. The gearing and assessment of adequacy of profits to meet interest payments, individual payments to shareholders and to provide sufficient safety to shareholders investment.

 

  • STATEMENT OF PROBLEM

This research work intends to look into the extent to which investors to carryout, and rely on the results of financial statements analysis before making their investment

 

 

 

Below is the website of our various clients from various higher institutions of learning. These are universities, polytechnic and college of education website in Nigeria.

Adeyemi College of Education, Ondo,

Alvan Ikoku College of Education, Owerri,

Alvan Ikoku College of Education, Owerri, .

Federal College of Educ. Abeokuta, .

Federal College of Education, Eha-Amufu, .

Federal College of Education, Kano, .

Federal College of Education, Katsina, .

Federal college of Education, Kontagora, .

Federal College of Education, Obudu, .

Federal College of Education, Okene, .

Federal College of Education, Okene, .

Federal College of Education, Pankshin, .

 Federal College of Education, Yola, .

Federal College of Education, Zaria, .

Federal College of Education (Technical), Akoka, .

Federal College of Education (Technical), Asaba, .

Federal College of Education (Technical), Bichi, .

Federal College of Education (Technical), Gombe, .

Federal College of Education (Technical), Gusau, .

Federal College of Education (Technical), Omoku, .

Federal College of Education (Special) Oyo, .

 

 

State college of education

College of Education, Agbor, .

Akwa-Ibom State College of Education, Afaha-Nsit, .

College of Education, Akwanga, .

College of Education, Akwanga, .

Cross River State College of Education, Akamkpa, .

Adamu Augie College of Education, Argungu, .

College of Education, Azare, .

Bayelsa State College of Education, Okpoama, .

Emmanuel Alyande College of Education, Oyo, .

Enugu State College of Education (Tech.) Enugu, .

College of Education, Ekiadolor, .

Umar Suleiman College of Education, Gashua, .

College of Education, Gindiri, .

Michael Otedola College of Primary Education, Moforiji, .

College of Education, Port Harcourt, .

Adeniran Ogunsanya College of Education, Otto, .

Tai Solarin College of Education, Ijebu-Ode, .

Tai Solarin College of Education, Ijebu-Ode, .

Ebonyi State College of Education, Ikwo, .

College of Education, Ikere, .

College of Education, Ilesha, .

College of Education, Ilesha, .

College of Education, Ilorin, .

College of Education, Jalingo, .

Kano State College of Education, Kumbotso, .

College of Education, Benue, .

Kebbi State College of Education, Argungu, .

College of Education, Minna, .

Nwafor Orizu College of Education, Nsugbe, .

College of Education, Oju, .

College of Education, Oro, .

College of Education, Oro, .

Oyo State College of Education, Oyo, .

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College of Education, Warri, .

College of Education, Warri, .

FCT College of Education, Zuba, .

 

Private college of education

Angel Crown College of Education, Gidan-Daya, .

Elder Oyama Memorial College of Education, Ofat-Adun, .

Assanusiyah College of Education, Odeomu, .

African Thinkers Community of inquiry College of Education, .

Best Legacy College of Education, Ikirun, .

Bauchi Institute for Arabic and Islamic Studies, .

Calvin Foundation College of Education, Naka, .

Harvard Wilson College of Education, Aba, .

Hill College of Education, Akwanga, .

Institute of Ecumenical Education, Enugu, .

College of Education, Foreign Links Campus Moro, .

College of Education, Foreign Links Campus Moro, .

Diamond College of education aba . past questions,jamb news, admission form and list

Muhyideen College of Education, Ilorin, .

ONIT College of Education, Abagana, .

The African Church College of Education, Lagos, .

St. Augustine College of Education, Yaba, .

Yewa Central College of Education, Ogun, .

 

 

List of Federal Universities in Nigeria

Abubakar Tafawa Belewa University, .

Ahmadu Bello University, Zaria, .

Bayero University, Kano, .

Federal University, Gashua, .

Federal University of Tech, Akure, .

Federal University of Petroleum Resources, Effurun, .

Federal University of Technology, Minna, .

Federal University of technology, Owerri, .

Federal University Dutse, .

Federal University Dutsin-Ma, .

Federal University, Ndufu-Alike, .

Federal University, Otuoke, .

Federal University, Wukari, .

Federal University, Birnin Kebbi, .

Federal University, Gusau

Michael Okpara Univeristy of Agric, Umudike, .

Modibbo Adama University of Tech, Yola, .

National Open University of Nigeria, .

Nigeria Police Academy Wudil, .

Nigeria defense Academy, Kaduna, .

Nnamdi Azikiwe University, Awka, .

Obafemi Awolowo University, Ile-Ife, .

University of Abuja, Gwagwalada, .

University of Agriculture Abeokuta, .

University of Agriculture Markurdi, .

University of Benin, .

University of Calabar, .

University of Lagos, .

University of Maiduguri, .

University of Nigeria Nsukka, .

University of Port-Harcourt, .

University of Uyo, .

Usmanu Danfodiyo University, .

List of State Universities

Abia State University, Uturu, .

Adamawa State University, Mubi, .

Adekunle Ajasin University, Akungba, .

Amrose Alli University, Ikot Akpaden, .

Anambra State University of Sc. & Tech, Uli, .

Anambra State University of Sc. & Tech, Uli, .

Bauchi State Unibversity, Gadau, .

Benue State University Markurdi, .

Bukar Abba Ibrahim University, Damaturu, .

Cross River State University of Sc. & Tech, Calabar, .

Delta State University Abraka, .

Ebonyi State University, Abakaliki, .

Ekiti State University, .

Enugu State University of Sc. & Tech. Enugu, .

Gombe State University, Gombe

Ibrahim Badamasi Babangida University, .

Ignatius Ajuru University of Education, .

Imo state University,Owerri, .

Jigawa State University, .

Kaduna State University, Kaduna .

Kano University of Sc. & Tech, Wudil

Kebbi State University, Kebbi, .

Kogi State University, Anyigba, .

Kwara State University, Ilorin, .

Ladoke Akintola university of Tech, .

Lagos State University Ojo, .

Nasarawa State University, Keffi, .

Niger Delta University, Yenagoe, .

Olabisi Onabanjo University Ago-Iwoye, .

Ondo State University of Sc. & Tech, Okitipupa, .

Osun State University, Oshogbo, .

Plateau State University, Bokkos, .

Rivers State University of Sc. & Tech, .

Tai Solarin University of Education, Ijebu-ode, .

Taraba State University, Jalingo, .

Umaru Musa Yar’Adua University, .

Private Universities

Achievers University, Owo, .

Adeleke University, Ede, .

Afe Babalola University, Ado- Ekiti, .

African University of Sc. & Tech, Abuja, .

Al-hikmah University, Ilorin, .

Ajayi Crowther University, Ibadan, .

Al-Qalam University, Katsina, .

American University of Nigeria, Yola, .

Babcock University, Ilishan, .

Baze University, .

Bells University of Technology, Otta, .

Benson Idahosa University, Benin, .

Bingham University, New Karu, .

Bowen University, Iwo, .

Caleb University, Lagos, .

Caritas University, Enugu, .

CETEP City University, Lagos, .

Covenant University, Ota, .

Crawford University, Igbesa, .

Crescent University, .

Elizade University, Ilara-mokin, .

Fountain University, Oshogbo, .

Gregory University, Uturu, .

Hallmark University, .

Igbinedion University, Okada

Joseph Ayo Babalola University,Ikeji, .

Kwararafa University, Wukari, .

Lead City University, Ibadan, .

Madonna University, Okija

Mcpherson University, Seriki

Nigerian-Turkish Nile University, Abuja, .

Novena University, Ogume, .

Obong University, Obong Ntak, .

Oduduwa University, Ipetumodu, .

Pan-African University, Lagos, .

Paul University, Awka, .

Redeemer’s University, Mowe, .

Renaissance University, Enugu, .

Salem University, Lokoja, .

Tansian University, Umunya, .

University of Mkar

Veritas University, .

Wellspring University, Edo, .

Wesley University of Sc. & Tech, Ondo, .

Western Delta University, Oghara

List of all the Federal Polytechnics

    Air Force Institute of Technology Nigerian Air Force, .

    Air Force Institute of Technology Nigerian Air Force, .

    Akanu Ibiam Federal Polytechnic, Unwana, .

Nigeria Army School of Military Engineering, .

     Auchi Polytechnic .

     Auchi Polytechnic .

    Federal Polytechnic, Ado-Ekiti .

Federal Polytechnic, Ado-Ekiti .

Federal Polytechnic, Bauchi, .

    Federal Polytechnic, Bida, .

 Federal Polytechnic, Bida, .

   Federal Polytechnic, Damaturu, .

     Federal Polytechnic, Ede, Osun State, .

         Federal Polytechnic, Ede, Osun State, .

 Federal Polytechnic, Ida, .

   Federal Polytechnic, Ida, .

  Federal Polytechnic, Ilaro, .

     Federal Polytechnic, Ile-Oluji, Ondo State, .

    Federal Polytechnic, Mubi, .

   Federal Polytechnic, Namoda, .

   Federal Polytechnic, Nassarawa, .

  Federal Polytechnic, Nekede, .

    Federal Polytechnic, Nekede, .

Federal Polytechnic, Offa, .

 Federal Polytechnic, Offa, .

 Federal Polytechnic, Oko, .

Federal School of Dental Technology and Therapy, .

Kaduna Polytechnic, Kaduna, .

Hussaini Adamu Federal Polytechnic, .

Nigeria Army School of Military Engineering, .

Federal College of Animal Health and Production Technology, .

Waziri Umaru Federal Polytechnic Birnin Kebbi, .

Yaba College of Tech, .

List of State Polytechnics in Nigeria

 Abraham Adesanya Polytechnic, Ijebu-Igbo, .

Abia State Polytechnic, .

Adamawa State Polytechnic, .

Akwa-Ibom State Polytechnic, Ikot-Osurua, .

Benue State Poly, Ugbokolo, .

Gateway Polytechnic, Igbesa, .

Rufus Giwa Polytechnic, .

Rufus Giwa Polytechnic, .

The Polytechnic, Ibadan, .

Institute of Mgt. and Tech, .

Imo State Polytechnic, Umuagwo, .

Kano State Polytechnic, .

Kogi State Polytechnic, Lokoja, .

Kwara State Polytechnic, Ilorin, .

Lagos State Poly, Ikorodu, .

Moshood Abiola Poly, .

Nasarawa State Polytechnic, .

Nuhu Bamalli Polytechnic, .

Delta State Polytechnic, Ogwashi-Uku, .

Osun State Poly, Iree, .

Osun State Poly, Iree, .

Osun State College of Tech, Esa-Oke, .

Delta State Polytechnic, Ozoro, .

Plateau State Polytechnic, Barkin-Ladi, .

Adamawa State Poly, .

Rivers State College of Arts and Science, .

Rivers State College of Arts and Science, .

Rivers State Polytechnic, .

Gateway Polytechnic Saapade, .

Edo State Inst. of Tech and Mgt, Usen, .

Niger State Poly, Zungeru, Niger State, .

List of Private Polytechnics in Nigeria

Allover Central Polytechnic, .

Crown Polytechnics, .

Covenant Polytechnic, .

Dorben Polytechnic, Bwari-Garam Road, .

Fidei Polytechnic, Gboko, .

Grace Polytechnic, .

Grace Polytechnic, .

Igbajo Polytechnic, .

The Polytechnic, Ile-Ife, NITEL Road, .

Lagos City Poly, Ikeja, Lagos State, .

Light House Polytechnic, Eubuobanosa, .

Interlink Polytechnic, .

Kings Polytechnic, Ubiaja, .

RONIK Polytechnic, .

Shaka Polytechnic, Polytechnic, Benin city, .

Temple-Gate Polytechnic, .

Wolex Polytechnic, .

Prime Polytechnic, .

The Polytechnic Imesi-Ile, Osun, .

Heritage Polytechnic, Ikot Udota, .

Ibadan City Polytechnic, .

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