Abstract
This research work was designed to appraise the financial
statements in assessing the performance of companies and in giving investment,
government and others, what the companies are worth. The purpose of this study
is to find out whether investors carry out analysis of financial statements before
making investment decisions and how the company’s financial statements are
influenced by political instability. To achieve the objective of this study,
the researcher formulated questionnaires, which were administered to the
respondents to gather data drawn from the subject being studied. The data
entered were analyzed using simple percentage method. The following findings
among others was made that company
financial statement are of immense importance to be analyzed by
prospective investors and the management so as to know what a company is worth
and based on the findings, the researcher recommended among others that in
taking investment decision, companies should
present information so obtained
and translated into financial statement in a clear and simple form to
the management, shareholder or investors.
CHAPTER ONE
TITLE PAGE
APPROVAL PAGE
ii
DEDICATION
iii
ACKNOWLEDGEMENT
iv
ABTRACT
v
TABLE OF CONTENTS vi
CHAPTER ONE
INTRODUCTION 1
Background of the study 1
Statement of problems 5
Objectives of the study 5
Research Question 6
Significance of the
study
7
Scope of the study 8
Limitations of the
study
8
Definition of terms 9
CHAPTER TWO
LITRATURE REVIEW 13
Introduction
13
Development of generally
Accepted accounting principles 28
the objectives of
statement
of changes in financial position 30
users of financial statement 31
characteristics of good financial Information 34
CHAPTER THREE
SUMMARY, CONCLUSION AND RECOMMENDATIONS 38
Summary
38
Conclusion
39
Recommendation
40
References 43
CHAPTER ONE
1.0 INTRODUCTION
BACKGROUND OF THE STUDY
Financial statements are part of which is to communicate
information about the company to those who have a right to receive it for
instance shareholders. Financial statement provide an indication if the
company’s trading performance.
As a minimum, financial statement includes profit and loss
account, balance sheet and related explanatory notes and also cash flow
statements.
The analysis of financial statements is therefore the
interpretation and transaction of facts and data contained in the financial
statements. The purpose being the drawing of relevant conclusions operation,
financial position and future prospects.
The procedure involves the analysis of data contained in the
financial statements. For example, in carrying is a very important figure.
Similarly, in balance sheet analysis, the components are net assts which is
usually compared with capital, loan stock and involving capital.
Transaction of those data into clear and simple form: the
translation process may lead to extraction of ratios or percentages that
established relationship between comparable data or even the presentation of
graph and charts, and also drawing relevant, conclusion and making inferences
concerning the company’s financial position, stability, profitability and
solvency.
Presentation of information so obtained for decision making.
The information is used for future controls and policies. The application of
this information will involve the isolation of the factors responsible for the
state of affairs revealed by the analysis. The analysis could be horizontal or
vertical, internal or external.
Horizontal analysis is a comparison of data in financial
statements of two or more consecutive accounting periods to detect whether
performance has improved or not. For example, the profit if a company in a year
can be compared with those of another year which a trend may arise from the
analysis. This analysis is internal as if concerns financial data of one
company alone. A horizontal analysis of financial statement can be internal
when a comparative study of data between one company’s financial statement and
that of another company over a given time is wholly internal and involves a
comparative analysis of data between one company’s financial statement and
trite of another company over a comparative analysis of data in financial
statement within a single period.