TABLE OF CONTENT
CERTIFICATION
DEDICATION
ACKNOWLEDGEMENT
ABSTRACT
INTRODUCTION
CHAPTER 1
1.1
BACKGROUND OF THE STUDY
1.2
STATEMENT OF THE PROBLEM
1.3
RESEARCH QUESTIONS
1.4
OBJECTIVE OF THE STUDY
1.5
SIGNIFICANCE OF THE STUDY
1.6
STATEMENT OF HYPOTHESIS
1.7
SCOPE OF THE STUDY
1.8
DEFINITION OF TREMS
ABSTRACT
The
research is an appraisal of financial information as a tool for management
decision making. It provides a conceptual and analytical framework of financial
information and its role in management decision making. A case study of MTN
NIG. is conducted in the research.
INTRODUCTION
One
of important assumptions in decision making process and improvement economy is existence
of quality information. Significant number of this information comes from
accounting information systems and from financial statements. Financial
statements have to provide realistic and objective picture of realistic
business condition of certain company. In other words, auditing of financial statements
is understandable, by which accuracy is ensured. In context of consideration of
financial statements as a function of decision making it is important to
emphasize that different users must know how to “read” those statements.
“Reading” contents of financial statements provide whole number of different
instruments and analyses procedures for understanding business.
A
well-established process of management on the basis of the financial statements
and financial information is one of the most significant presumptions of the
quality business. Decision making process requires information – financial and
non-financial information as well. The most important financial information
needed in the process of business decision comes from accounting.
Therefore,
we can say that accounting is a service function to management. It, basically, processes
or gathers and studies “raw data” and converts them into suitable information in
the process of decision making. The basic characteristics of the accounting
are:
·
Gathering, processing and presenting
accounting (financial) information
·
Information considering company’s
business
·
Those directed towards different
interested users
Accounting
of quality information Significant number of this information comes from
accounting information systems and from financial statements. Financial
statements have to provide realistic and objective picture of realistic
business condition of certain company. In other words, auditing of financial statements
is understandable, by which accuracy is ensured. In context of consideration of
financial statements as a function of decision making it is important to
emphasize that different users must know how to “read” those statements.
“Reading” contents of financial statements provide whole number of different
instruments and analyses procedures for understanding business. A well-established
process of management on the basis of the financial statements and financial
information
is
one of the most significant presumptions of the quality business.
CHAPTER
1
1.1
BACKGROUND OF THE STUDY
In
order to improve the usage of financial information in the context of the
decision making process, we need to analyze financial statements. In that
context, we can describe financial statement analysis as the process where we
convert data from financial statements into usable information for business
quality measurement by different analytical techniques, which is very important
in the process of rational management.
Therefore, to know the current level of business quality is
very significant in the context of future business management, since we try to
ensure company’s development and existence on the market. Financial statement
analysis comes before the management process that is before the process of
planning which is the component of the management process.
Planning
is very important for good management. Good financial plan has to consider all
company’s strength and weaknesses.
The
task of financial statement analysis is to recognize good characteristics of
the company so that we could use the most of those advantages, but also to
recognize company’s weaknesses in order to take corrective actions. Because of
that, we can say that management of the company is the most significant user of
financial statement analysis.
The research intends to investigate financial information as
a tool for management decision making with a case study of MTN NIG.
1.2
STATEMENT
OF THE PROBLEM
The problem confronting this research is to
investigate financial information as a tool for management decision making.
1.3
RESEARCH QUESTION
1
What
is financial information?
2
What
is the source of financial information?
3
What
is the role of financial information in
management decision making?
4
What
is the role of financial information in management decision making in MTN NIG?
1.4
OBJECTIVE OF THE STUDY
1
To
appraise the nature of financial information
2
To determine
the nature of management decision making
3
To
appraise the role of financial information in management decision making
4
To
determine the role of financial information in management decision making in MTN NIG
1.5
SIGNIFICANCE OF THE STUDY
1. The
study shall analyze the nature and source of financial information
2. The
study shall provide a framework for the use of financial information in management decision making
3. The
study shall appraise the role of financial information in management decision making in MTN as a case appraisal
1.6
STATEMENT OF HYPOTHESIS
1
Ho Financial information is not significant
in MTN
Hi Financial information is significant in
MTN
2
Ho The level of financial information in MTN
is low
Hi The level of financial information in MTN
is high
3
Ho The impact of financial information in
management decision in MTN is
low
Hi The
impact of financial information in management decision in MTN is
high
1.7
SCOPE OF THE STUDY
The
study investigates financial information as a tool for management decision
making with a case study of MTN NIG
1.8
DEFINITION OF TERMS
ACCOUNTING/FINANCIAL
INFORMATON
Decision
making process requires information – financial and non-financial information
as well.
The
most important financial information needed in the process of business decision
comes from accounting. Therefore, we can say that accounting is a service
function to management. It, basically, processes or gathers and studies “raw
data” and converts them into suitable information in the process of decision
making. The basic characteristics of the accounting are:
·
Gathering, processing and presenting
accounting (financial) information
·
Information considering company’s
business
·
Those directed towards different
interested users
Accounting
process contains several phases. Basically, it is a process in which input data
converts into output information. If we focus our attention on the most
significant part of the accounting (bookkeeping), then we can present the data
processing through several phases as it is shown in Figure 1.
The
first data processing phase consists of collecting data about occurred business
events. After data collecting comes the second phase of the accounting process
that consists of business event analysis, after that recording in journal and
general ledger comes.
At the end of accounting period, just before preparing basic
financial statements, we need to check data accuracy in the books since we make
financial statements on the basis of those data. Therefore we prepare the trial
balance. It represents the recapitulation of all ledger accounts and financial
transactions. After all records are coordinated and after we find all data
accurate, we have the last phase of the accounting process that refers to
preparing financial statements. As it has already been pointed out, financial
statements have to satisfy interests of different accounting (financial)
information users.