ABSTRACT
In this project, the usefulness of interpreted Accounts in
decision making by management helps an organization to determine the
profitability (profit position) of operations in a production and marketing
company, subject to some limitations is formulated. This study used data from
the financial statement and published account of a large bottle and drinks
production and marketing company. The result of the model shows that an
organization should have enough liquidity demands. Most importantly it is now
clearly seen that the case study on interpreted position of 7up bottling
company plc reveals; a glance of real financial position of a company in
relation and get the management information of their past performance. So it
enables them to take corrective actions in predicting the future operation of
the company.
TABLE OF CONTENT
Title Page
Approval
ii
Dedication
iii
Acknowledgement
iv
Abstract
v
Table of content
vi
CHAPTER ONE
Introduction
1
Background of the study 2
Statement of the problem 5
Objective for the study 5
Research Question
6
Significance of the study 7
Scope of the study 7
Limitation of the study 9
Definition of terms 10
CHAPTER TWO
Review of related literature 13
Introduction
14
Financial ratio analysis 16
The significance of accounting ratio analysis 17
Limitation of accounting ratio analysis 18
Criteria for interpretation of management
Account
21
The impact of modern
development of
Interpreted accounts
in Nigeria 22
CHAPTER THREE
Research Design and methodology 38
Introduction
38
Research design
39
Sources/ Methodology of data Collection 40
Population and Sample size 41
Sample Techniques 41
Validity and reliability of measuring Instrument 42
Method of data analysis 44
CHAPTER FOUR
Presentation and analysis of data 46
Introduction
46
Presentation of data 47
Analysis of data
48
Interpretation of result. 54
CHAPTER FIVE
Summary/conclusion and recommendation 57
Introduction
57
Summary of findings 58
Conclusion
60
Recommendations
61
References
63
Appendix
CHAPTER ONE
1.0 INTRODUCTION
Interpreted account as the name implies is more than mere
figure into their appropriate look of account. It involves the use of collected
information and data in the assessment of efficiency in addition.
The study of interpreted account would enable one’s monitor
the performance of the business, with the view of taking appropriate corrective
measures as at when necessary.
My concern here is to the usefulness into which one can put
the data that are usually available in the interpreted account of organization.
Some of these data are already made available in the
interpreted account while others might have to be made using the accounts.
BACKGROUND OF THE STUDY
This research is
about the usefulness of interpreted account in decision making by management. Decision
making is the most important element in management activities of all kinds of
enterprise, profit oriented, non profit oriented and public institution. This
research is carried out in public oriented enterprise where decisions are made
based on different aspects among which the use of accounting ratios should have
a great impact.
The use of financial reporting is the main aspect in
decision making. According to (Charus H. Cusonm 1989:10) financial reported is
not the end in itself but it is intended to provide information that is useful
in making business and economic decision. It is in this regard the researcher
was motivated in funding the extend to which management dealers may depend on
accounting ratios in decision making. The main objective of this chapter is to
introduce the researcher’s topic and it content include, background of the
study, research questions, significance of the study, scope of the study and
organization of the study. As an Act management has been practiced since the
early beginning of twentieth century. It had got a great evolution at the time
of industrial revolution which started in England around mid-eighteenth century
prior to this most of business enterprise were characteristised by
craftsmanship rate than mechanization or technology and faced the problem much
simpler than those faced today’s form
much in air complex industrial and technological society.
With reference to this industrial revolution till nowadays
with social and technological environment tend to generate industrial growth
and economical environment development that prompt entrepreneurs to react.
At the same time in the form of management especially in
managerial strategies for decision making this generate separation of ownership
of the business and its management.
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 interpreted account is a time-tested method of
analyzing a business. Wall street investment firms, banks, loan officers and
knowledgeable business owners all use interpreted accounting information and
ratio analysis to learn more about a company’s current financial health as well
as its potential (P. Veranimn 2006).
Interpreted account simplified, summarized and systematized
a long array of accounting figures. Its main contribution lies in bringing out
the inter relationship which exists between various segment of business. Ratio
are more of a diagnostic tool that helps to identify problem areas and
opportunity within a country.
STATEMENT OF THE PROBLEM
The following are statement of research problem to be
researched;
whether the profit realized over the period are adequately
related to the capital employed
whether the company is solvent enough to meet its current
liabilities out of it current asset
whether the company has been efficient in operation over the
year.
1.3 OBJECTIVE OF THE STUDY
The main objective of the study is to provide financial
information of the organization involves was follows:
To provide information to the users so as to enable them
make relevant decision for management.
To find out the
relationship between the capital employed and the resulting profit realized
during the period .
To summarize its performance in terms of profit
To ascertain the solvent of the company as at when due
To know whether the analysis gives useful interpretation as
to efficiency.
To help show the relative strength and weakness of the
company.