Accounting Ratios and Decision Making in Nigeria Manufacturing - A Survey of Selected Manufacturing Companies in Nigeria



Reference code: C094

ABSTRACT

Ratios are highly essential profit tools in financial analysis that helps financial analysts implement plans that improve profitability, liquidity, financial structure, reordering, leverage and interest coverage. Although ratios report mostly on past performances, they can predict too, and provide lead indications of potential problem areas. In this research work, relevance of accounting ratios and decision making in Nigeria manufacturing  company ; a case study of Nigerian breweries plc. The researcher considered in chapter one, the introduction of the study which will in turn consider the following topics. The background of the study, the statement of problem, research questions, objectives of study, hypothesis, scope of study, significance of the study. The main objective of this study is therefore to evaluate the relevance of Accounting Ratios and Decision Making in Nigeria. Amongst the specific objective of this study was the determination of the effects of Relevance of Accounting Ratios and Decision Making In Nigeria Manufacturing companies. The study shows that Accounting ratio and Decision Making has helped to provide the knowledge of financial analysis techniques and interpretation of the available data for managerial purpose which makes it necessary  for managers to rely strongly on Ratios  for Decision Making. Chapter two focuses on the literature review; this chapter is where the researcher extracts materials from various books, magazines, newspapers and internet resources. In chapter three, the researcher deals on research methodology  which consists of Research Design, population, sample and sample techniques, types and sources of data, instrument of data collection, validation and reliability of research instrument, data analysis technique and method of data presentation and analysis. The population of this study consists of the staff of the finance and account department of nig breweries plc. T test analysis was used to test the model formulated to support the hypothesis based on the study and that of the tested hypothesis while chapter four is data analysis and interpretation and based on the review and data analysis carried out it was said that financial ratio is a relevant tool in organization decision making, accounting ratio is significant in management decision making of firms, managers rely on ratios for their decision making and ratio analysis can be used to monitor profit trend and yearly performance of organization. Chapter five consists of summary of findings, conclusion and recommendation, and it was concluded that the current appropriate use of ratio analysis in Nigeria breweries has helped to highlighting areas where organizations are having problem as regards financial management.

BACKGROUND TO THE STUDY

............. In consequences, managers had to look for the means of discharging their stewardship responsibility; this can be obtained through the use of accounting ratios. The use of accounting ratios is a time-tested method of analyzing a business. Wall Street investment firms, bank loan officers and knowledgeable business owners use accounting ratio analysis to learn more about a company's current financial health as well as its potential (Vernmmen, 2006). Ratios analysis simplified, summarizes, and systematizes a long array of accounting figures. Its main contribution lies in bringing out the inter-relationship which exists between various segments of business. Ratios are more of a diagnostic tool that helps to identify problem areas and opportunities within a company.

1.2 Brief Historical Background of Nigerian Breweries Plc
Nigerian Breweries Plc, the pioneer and largest brewing company in Nigeria, was incorporated in 1946. In June 1949, the company recorded a landmark when the first bottle of STAR lager beer rolled off its Lagos Brewery bottling lines. This first brewery in Lagos has undergone several optimization processes and as at today boasts of the most modern brew house in the country  ...................

TABLE OF CONTENTS

CHAPTER ONE: INTRODUCTION
1.1. Background to Study           1
1.2. Brief Historical Background   2
1.3. Statement of The Problem      3
1.4. Research Question             4
1.5. Objectives of the Study       4
1.6. Hypothesis                    5
1.7. Scope of the Study            5
1.8. Significance of the Study     5
1.9. Organization of the Study     6
1.10. References                    7

CHAPTER TWO: LITERATURE REVIEW 
2.1. Financial Statement                      8
2.2. Accounting Ratios and Decisions makings  12
2.2.1. Analyzing of Liquidity                 12
2.2.2. Asset Equity Ratio or Leverage Ratios  14
2.2.3. Analyzing Sales and Profitability      14 
2.2.4. Analyzing Efficiency           15
2.3. Classifications of Ratios        15
2.4. Uses/Users of Financial Ratios   16
2.5. Ratio Analysis                   20 
2.6. Usefulness of Financial Ratio    21
2.7. Financial Analysis               22
2.7.1 Types of Financial Analysis     24
2.7.1.1. Intra company Analysis       24
2.7.1.2. Inter Company Analysis       25
2.8. Importance of Financial Information  26
2.9. Classification of Ratios       26
2.9.1. Profitability Ratio          27
2.9.2. Liquidity Ratio              29
2.9.3. Leverage Ratio               31
2.9.4. Activity Ratio               33
2.10. Limitations of Ratios         38
2.10.1. Dealing with the problems   45
2.11. References                    47

CHAPTER THREE: RESEARCH METHODOLOGY
Introduction                                    50
3.0. Research Design                            50
3.1. population, Sample and Sample Technique    50
3.2. Types and sources of Data                  50
3.3. Instruments of Data Collection             51
3.4. Validity and Reliability of Instruments    51
3.5. Data Analysis Techniques and Presentation  52
3.4. Method of Data Presentation and Analysis   52  
3.5. References                                 54

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.0. Introduction                                                55
4.1. Data Presentation and Analysis                              55
4.1.1. Presentation and Analysis of Secondary Data collected     55
4.1.2. Presentation and Analysis of Primary Data Collected       57
4.1.2.1 Presentation and Analysis of Respondents Bio-Data        57
4.1.2.1 Presentation and Analysis of Data Related to the Study   63
4.2 Hypothesis   Testing                                         68

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION
5.1. Summary of Findings                   71
5.2. Conclusion                            73
5.3. Recommendation                        74
BIBLIOGRAPHY                               75
APPENDIX                                   79


Reference code: C094
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Reference code: C094

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