ABSTRACT
The study examine the Impact of Accounting Ratios on the Profitability of manufacturing companies in Rivers State with the purpose of finding whether Accounting ratios impact on profitability of manufacturing companies, and if it does, to what extent does it impact? There where three research questions and three hypotheses. The three research hypotheses where analysed using the simple percentage and the Spearman’s Rank Correlation Coefficient to test the hypotheses postulated in chapter one of the study. The findings were: Accounting ratios affect efficiency; accounting ratios impact on productivity; liquidity ratios affect investment decision-making. In the course of the findings, it was concluded that a good analysis of accounting ratios informs the management of the necessity to improve on sales; accounting ratio analysis informs the management if resources and man utilized are productive within the period under review; explains to management and shareholders alike of how efficient they were about to utilize the current asset, and to what extent the result may influence investors; and the recommendations was: Management should ensure efficiency and profitability as it will be indicated during accounting ratio analysis; effective productivity should be the watch-ward of management and management should be more effective and efficient in utilizing resources entrusted to her as liquidity ratio analysis will showcase the extent of efficient management of resources and man.
INTRODUCTION
............... Accounting has been broadly conceived as the measurement and communication of economic information relevant for decision-making. The communication function of accounting is performed via the preparation and issuance of financial statements. The basic financial statements include the balance sheet, the income statement and the funds statement. The primary purpose of financial statements is to assist users make informed and better economic decisions.Those who use financial statements to make economic decisions are of two broad groups, namely: the internal decision makers which constitute the management, and the external decision makers which comprise primarily the present and potential investors, short term and long term creditors, investment analysts, labour, government and its agencies, and the public at large. While the internal decision makers make use of the financial data derived from management accounting, the external decision makers rely on financial data from financial accounting and external financial statements.
According to ICAN, (2006), financial ratio is defined as the relationship between two accounting figures expressed mathematically. Ratio analysis is a powerful tool of financial analysis. Pandey, (2001) define a ratio as “the indicated quotient of two mathematical expressions” and as “the relationship between two or more things. In financial analysis, a ratio is used as an index or yardstick for evaluating the financial position and performance of a firm.
Therefore, the fundamental objectives for using financial data generally include principally:
i. To measure past performance of a business by monitoring such items as turnover, net income, cash flow of working capital, return on investments (ROI), etc. Through these means the success of the business as well as the efficiency and effectiveness of the management ...............
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TABLE OF CONTENTS
CHAPTER ONE: : INTRODUCTION
1.2 Overview Of The Study
1.2 Statement Of The Problem
1.4 Purpose Of The Study
1.4 Research Questions
1.5 Research Hypotheses
1.7 Significance Of The Study
1.7 Definition Of Terms
1.8 Scope Of The Study
1.9 Limitations Of The Study
1.10 Organisation Of The Study
References
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Introduction
2.2 Analysis Of Financial Statements
2.2.1 Financial Ratio Analysis
2.2.2 Types Of Financial Analysis
2.2.3 Key Financial Ratios
2.2.4 Types Of Financial Activities
2.2.5 Profitability Ratio
2.2.6 Liquidity Ratios
2.2.7 Long-Term Solvency Or Debt Ratio
2.2.8 Shareholders Investment Decision Ratio Or Activity Ratio
2.2.9 Standard Of Comparison Of Ratios For The Purpose Of Financial Statement Analysis
2.3 Computation Of Ratios
2.3.1 Profitability And Efficiency Ratios
2.3.2 Liquidity And Short-Term Solvency Ratios
2.3.3 Debtors Turnover
2.3.4 Long-Term Stability
2.3.5 Activity Or Shareholders Investment Ratios
2.4 Purpose Of Financial Statements Information
2.5 Financial Analysis Using Ratios As Tools For Investment Decision Making References
CHAPTER THREE: RESEARCH METHODOLOGY
3.0 Introduction
3.1 Research Design
3.2 Population Of The Study
3.3 Sampling Procedure/Sample Size Determination
3.4 Method Of Data Collection
3.4.1 Questionnaire Design
3.5 Operational Measures Of The Variables
3.6 Data Analysis Technique
Reference
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.2 Introduction
4.2 Data Presentation
4.3 Data Analysis
4.3.1 Testing Of Hypothesis
Hypotheses I
Hypotheses I
Hypotheses Iii
CHAPTER FIVE: DISCUSSION OF FINDINGS, CONCLUSION AND RECOMMENDATION
5.0 Introduction
5.1 Discussion Of Findings
5.2 Conclusion
5.3 Recommendations
Bibliography
Appendices
Reference code: c034
Reference code: c034
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