ABSTRACT
This research work examined the relevance of financial ratio
analysis in the appraisal of small scale business with particular reference to
Mr. Biggs fast food in cross river state. The study examined the establishing
of the extent to which accounting ratio can be used to interpret accounting
records of small scale business, finding and analysing the meaning of financial
ratio analysis to the researcher knowledge and understanding of financial
statement of the company, to establish the effect of ratio analysis on the users
of financial statement and to highlight available ratios for measuring the true
state of performance of company. The data were collected from both primary and
secondary sources, while primary data was collected by the use of
questionnaires; the secondary data were based on readings from textbooks,
internet and journals. Data from the response to questionnaire was presented
using the statistical tool Chi-square. From the analysis, the findings showed
that non challant attitude in the use of financial statement affects small
scale business; obsolete use of data affects small scale business and also that
lack of competent management affect small scale business. It was however
recommended that the retained earnings of the small scale business should be properly
invested in order to have more capital for business.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF STUDY
Financial ratio analysis assumes that there is a
relationship between certain aspects of the activities of the firm as revealed
in the income statements, Accounting figures reported in the financial
statement do not provide Profit and loss account and the balance sheet, which
established a pattern of behaviour. The information contained in the financial
statement of a company is connected with the financial well being and
performance of the reporting entity, organized to enable users of financial
statement to draw a conclusion meaningful understanding of the performance of
the financial position of a firm, except the figure are analyzed with other relevant
information through the use of financial ratio analysis.