This Research Work in an attempt to the Analysis of
Management and Performance in Financial Institutions using Cadbury
Nigeria Plc. and Nestle Food Nigeria Plc as a case study. One area in
which accountants in industry can make a valuable contribution to
improve financial performance is by instituting and
Interpreting business ratio analysis and applicable predictive model,
this interpretation of ratios and predictive model may often suggest
strength and weaknesses in the operations and financial position of the
company, which may lead to depth or further investigation.
The method of data collected was by questionnaire on Ratio
Analysis as a Predictive Tool for Business Performance, while secondary
data from official reports of the organization was used for productivity
and profitability. the questionnaire were distributed to the various departments to ensure that each section employee is given
a chance of being sampled and the method of data analysis was used
coding and decoding of questionnaire received from performance of staff,
under different leadership and by the use of chi-square (X2) test.
This research work is being conducted in anticipation that it will put an end to the
problem of management succession in organization, for better management
function and improvement in the organization's productivity.
The evaluation of performance of business firm is an
important aspect of financial management since this will help all those
who have interest in the firm to make sound decision that would favour
them. In the light of the above, it is highly recommended that the ALTMANZ score could still be used in predicting how a firm would perform.
It is recommended that when applying a model caution should be maintained so as
to be misguide, other underlying factors should' be considered before
forming an opinion on the business performance such management policy.
1.1 HISTORICAL BACKGROUND OF THE STUDY
Any successive management is constantly estimating the performance of
her comparing it with the company's historical figures, with its
industry editors. And even with successful business from other
industries. To complete a thorough' examination of company is
effectiveness, however, one need to look at more than just easily
attainable numbers like sales, Profits and total assets. One must be
able to read between the lines of financial statements and make the
seemingly inconsequential numbers accessible and comprehensible. This
massive data overload could seem staggering. Likely, there are many
well-tested ratios out there that make the task a bit less daunting.
Comparative analysis and evaluation helps us to identify and quantify
company's strengths and weakness, evaluate its financial position, and
understand the risks one may be taking.
As with any other form of analysis, comparative evaluation techniques
aren't definite and their results shouldn't be viewed as gospel. Many
of thebalance-sheet factors can playa role in the success or failure of a
company. But, when in concert with various other business evaluation
processes comparative management and performance are invaluable.
Mathematically, the word ratio implies the relationship of one Item
to another otherwise; it can be defined as the relationships that exist
between two or more variables whether dependent or independent. The
coefficient that is obtained by using one variable to divide the other
variables precisely tells us the positional situation Analysis
therefore, is the systematic productions from both internal and external
financial reports so as to summarize key relationships and results in
order to appraise financial performance. Analysis and the evaluation as a
practical means of monitoring and informing performance is greatly
(a) Analysis and evaluation are prepared regularly arid on a
consistent basis so that trends can be highlighted and the charges
(b) The analysis prepared for an individual firm can .be compared
with other firm in the same industry. This process is greatly
facilitated when the firm has ready access to comparative ratios
prepared in a standardized manner.
(c) It prepared showing the inter-locking and inter-dependent
nature of factors, which contribute to financial success. (Terry, 2003).
Analysis in accounting is an important predictive tool of business
performance and to be able to apply the model to any business concern.
Answers should be provided to the following question which contribute
the problems that the researcher attempts to solve.
So as to reduce to the barest minimum, the variability in investment
risk become the more certain and uncertain the growth and profitability
of an organization are, the less risky is an investment in such
1.2 STATEMENT OF PROBLEM
This research work examines the use of ratios as a predictive tool
for management and performance in order to measure the growth and
profitability if the company. But there is some dissatisfaction
associated with the use of certain techniques. These include:
(1) Analysis and evaluation of management used in financial
statement can be misleading to user such Information if not carefully
(2) Financial information Analysis normally uses are adjusted for
changes in the level of general prices, which can distort the analysis
(3) It was historical (initial data) and the question arises as to
whether such data can provide for a relevant basis for making
(4) The act of analysis IS firstly, in selection of those ratios
must appreciate under circumstance and subsequently in the
Interpretation of the position which they reveal.
1.3 PURPOSE OF STUDY
The major purpose of this study is to analyses extensively the
various financial statement with regards to telling the direction of
growth of an organization when a negative growth is noticed, adequate
strategies are then formulated to put the organization on success path.
It is also the objective of the researcher to help any reader of this study in the following ways.
(a) The general and specific knowledge about analysis of evaluation and the computation.
(b) That through a careful study and monitoring of the analysis of
an organization, one can predict the direction of growth and thereafter
take decision to suit individual situation.
(c) The research put the reader on the trial on logical reasoning,
which leads to curiosity to know more about the topic and as much
leading to further research which increase the total volume of human
1.4 RESEARCH QUESTIONS
1. To what extent is comparison of performance between companies is difficult to accounting policies adopted
2. Does financial statement calculated from accounting data subjected to different interpretation and manipulation adopted.
3. Does financial statements comply with all statutory
requirements and other regulations relevant to the constitution and
activities of the enterprise
4. Does adequate disclosure of all appropriate matter and the
information contains in the financial statement is properly classified
1.5 RESEARCH HYPOTHESES
Ho: Comparison of performance between company’s management is not difficult because of different accounting policies adopted
Hi: Comparison of performance between company’s management is difficult because of different accounting policies adopted.
Ho: That financial evaluation calculated from accounting data are not subjected to different interpretation and manipulation
Hi: That financial analysis calculated from accounting data are subjected to different interpretation and manipulation.
1.6 SIGNIFICANCE OF THE STUDY
The aim of the study is to arouse interest in the use of ratio
analysis as an effective instrument to measure business performance and
to juxtapose the performance of each case of studies because ratios are
to measure the achievement and failure of a business. It is also an
effective instrument for prudent management of financial resource and
for the growth of the business.
This study is also help in highlighting areas where organizations may
have problem in area of financial management and encourage such
organizations to adopt the rise of ratios to see its rises and efforts.
Finally it will help students, researchers and the companies choose a
case of study in their course of study and go a long way in showing the
financial problem to shareholders, financial analyst, Governments,
Potential investors, Employees aid management as well.