The use of financial statement in any business organization cannot be over emphasized, financial statements are needed by variety of people for different purposes.
For instance, the government needs the financial books (reports) of a company for taxation purposes, the investors want to know how profitable a company is and will be able if the management of the company will like to know the level of their performance, all these cannot be known without the analysis of financial statement of the company or companies involved.
The research work therefore forecast on the usefulness of financial statements in assessing the performance of companies and guiding investment decisions, in order to provide investors, management, government and others what the company is worth.
Finally, the sources of data which are, primary and secondary data which led to the discussion of findings, conclusions and recommendation of the research topic.
BACKGROUND OF THE STUDY:
A company’s financial statements are analyzed internally by management and externally by investors and creditors.
Management analysis of financial statements primarily relates to parts of the company which enables management to plan, evaluate, and control operation within the company. Investors and creditors generally focus their analysis of financial statements on the company as a whole, which helps them decide whether to invest in or extend credit to the company.
As a minimum, financial statement will include a statement of source and application of funds. Having been able to obtain a fair knowledge of the legal aspects of preparing financial statements and having worked examples through basic financial statements of a company, it is reasonable to begin to think of the significance of the futures therein.
His is because except the figure in financial statements will not in itself serve any purpose, the figures in the financial statements are therefore:
Unless a means is available for being able to obtain the information specified above a financial statement would just be of no substance and use.
In order therefore to interpret financial statements for the proper information of users, there is the need to proper ratio analysis and when to present to management, a number of issues must be considered.
STATEMENT OF THE PROBLEM:
This research work intends to look into the extent to which investors do carry out and rely on the results of financial statements analysis before making their investment decisions, and the employment by companies of financial statement analysis in assessing their performance and that of their respective management.
OBJECTIVES OF THE STUDY:
The objectives of this study are as follows:
SIGNIFICANCE OF THE STUDY:
This work would be of immense benefit to the following groups:
The major contribution of this work are:
SCOPE AND LIMITATION OF THE STUDY:
This study is restricted to only the analysis of the financial statements of manufacturing, trading and profit making organizations. The researcher would have liked to give the work a wide coverage if not for some constraints imposed on hereby time and access to finance.
The following research questions will be used to get information for the purpose of evaluating the usefulness of financial statements in assessing the performance of companies an in guiding investment decisions especially as it affects Onitsha Aluminium company in particular.
STATEMENT OF HYPOTHESIS:
Hypothesis testing will involve the use of null hypothesis (Ho), the study is seeking to reject. It’s rejection will lead to the acceptance of the alternative hypothesis (H1).
Ho: Financial Statements do not help in guiding investment decisions.
H1: Financial statements help in guiding investment decisions.
Ho: Financial statements are irrelevant in assessing the performance of Onitsha Aluminium Company.
H1: Financial statements are very relevant in assessing the performance of Onitsha Aluminium Company.
DEFINITION OF TERMS:
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