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Evaluation of Ratio Analysis On Investment Decision Making
Evaluation of Ratio Analysis On Investment Decision Making
RATIO
ANALYSIS IN
INVESTMENT
DECISION
MAKING.
1
A CASE STUDY OF BLESSED OBIOMA ELECTRONICS NIG.
LTD.BAYELSA STATE.
BY
....................................................
(AKP/WRR/BMG/FIN/ND2007/0010)
TECHNOLOGY, SUBMITTED
NOVEMBER 2009
2
APPROVAL
accountancy .
Date
Project Supervisor
3
DEDICATION
4
ACKNOWLEDGMENT
and loved ones for their prayers, moral and financial support
which this project would not have seen the light of the day.
5
In like manner, I wish to acknowledge the effort of all my
studies.
ABSTRACT
6
Ratios are highly essential profit tools in financial analysis
7
chapter four is data analysis and interpretation. The finding,
CHAPTER ONE
INTRODUCTION
9
of people, time, technology, intellectual capital, and, of
course, money.
results.
We want the best decisions to be made for any and all investment opportunities:
10
One of the most important long term decisions for any
yield returns?
11
The main objective is evaluation of ratio analysis in
proposals
12
financial analysis, the process of determining and
and its annual sales. The basic source for these ratios
over time.
the following:
under consideration.
organizations/firms.
14
3. The students of marketing, accounting and business
administration.
etc
resources.
16
In nutshell, we want to mellow down this point to the
following subtopics
Material Procurement
Time Constraints
the project.
Financial Constraints
resident.
1.6 HYPOTHESIS
phenomenon.
variables.
HYPOTHESIS THUS:
18
ALTERNATIVE HYPOTHESIS for the purpose of the
as follows:
ALTERNATIVE HYPOTHESIS
17 STRUCTURE OF WORK
as follows:
1. Introduction
19
2. Literature Review
CHAPTER TWO
LITERATURE REVIEW
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Ratios are highly essential profit tools in financial
problem areas.
or more companies.
time span.
industry norms.
aspects:
22
Evaluation of Liquidity: The ability of a firm to meet
23
Evaluation of Financial Strength: Long-term
requirements.
24
2.2 LIMITATION OF RATIO ANALYSIS
different.
considered normal.
26
(g) High or Low: A number by itself cannot be
analyzed.
and efficiently.
27
criteria. Corporate management seeks to maximize the
dividend decision.
28
Project valuation
29
Managers use models such as the CAPM or the APT to
be defined as:
It = Kt - Kt-1
31
How is the theory of investment different from the
to the other.
consideration.
33
CHAPTER THREE
population;
34
(ii) It is a design in which a structure and systematic
data;
workplaces;
brought;
statistically; and
(vi) The aim of the research may span from the exploration
35
such a way as to make it low due to the utilization of
errors.
3.2 Sampling
The list of all senior and junior staff of the firm is from
3.3 Population
37
The population, in this study is the totality of the senior
Bayelsa State.
that:
population.
Questionnaire
38
As earlier stated, the primary data collection
disapproved.
39
Another attribute of the questionnaire that is
(Selltiz, 1976).
40
There is also limitation of memory in reporting on past
1996).
41
Ten (10) of the questions have yes or no answers,
Interview
42
chance for clarification of misunderstood questions. It
questionnaire.
Observations
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how to greet the respondents and how to tick the
Tools
(c) Caption
prose information;
a prose formation:
testing.
45
CHAPTER FOUR
4.1 INTRODUCTION
been handled. In this chapter the data presentation and analysis are
simple bar charts, one histogram and one pie chart to make it
attributes and also breaking the unit of their components (Mills and
Walters 1995).
Podsakoff and Dalton (1995) that the factual information from the
Apart from the heading above, the other headings in this chapter
include:
Data Presentation,
Percentage analysis
46
Cross-tabulated analysis
Hypothesis testing
TABLE 4.1
47
1 SEX FREQUENCY
Male 150
Female 50
Single 70
Total 200
AGE
21-30 years 90
3 31-40 years 90
41-50 years 10
51-60 years 10
Total 200
HIGHER
EDUCATIONAL
QUALIFICATION
4 DIPLOMA 10 18
OND 30 54
HND 80 144
FIRST DEGREE 20 36
SECOND DEGREE 40 72
NIM 20 36
The marital statuses of the 200 respondents it is found that 130 of them
are married while 70 of them are single. For the ages of the 200
respondents they are 21-30 years, 31-40 years, 40-50 years, 51-60
Degree, Second Degree, NIM. and they have frequencies of 10, 30, 80,
Figure 4.1 below shows the simple bar chart of the data on the sex of
the respondents.
160-
140-
120-
-
-
100--
-
80
MAIL FEMALE
TABLE 2. GENDER OF THE RESPONDENTS
Gender
60
Frequency percentage Valid Cumulative
Percent Percent
MAIL
40 150 75.0 75.0 75.0
-
Source: from data in table 1 (generated from SPSS) statistical
package for social science.
From figure 4.1 above, it is shown that male respondents have the
modal frequency of 150 out of the 200 respondents while the female
Figure 4.2 below shows the simple bar chart of the data on the marital
FIGURE 4.2: THE SIMPLE BAR CHART OF THE DATA ON THE MARITAL
STATUSES OF THE RESPONDENTS
140 -
-
Frequency
120 -
-
100 -
80 -
60
MARRIED SINGLE
Marital status
40
the modal frequency of 130 out of the 200 respondents while the
10.
Figure 4.4 below shows the pie chart of the data on the
respondents.
OND DIPLOMA
80%
10% HND
FIRST DEGREE 52
TABLE 4. 5 EDUCATIONAL
SOURCE: from the data QUALIFICATION
in table 1. OF THE RESPONDENTS
O.N.D, First Degree, Second Degree and NIM and the subtended
angles in degrees are equal to 18 0, 540, 1440, 360, 720 and 360 and
200 respondents
53
TABLE 6. CROSS- TABULATION 1
Total
DON’T NO
YES NO ANSWER
KNOW
DIPLOMA 6 2 2 12
2
OND 19
19
HND 91
FIRST 60 31
DEGREE - 10 9 7
26
SECOND 31
DEGREE
31
21 21
NIM
100 43 11 9 200
Total
TABLE 7. Cross-tabulation 2
NO
YES NO DON’T ANSWER Total
KNOW
DIPLOMA 10 10
OND 19 19
HND 14 30 47 91
FIRST
DEGREE 10 9 19
SECOND
DEGREE 40 40
54
NIM 21 21
out of 200 said yes. While 40 did not agree with the fact.
test of significance.
55
denoted by the symbol H0. Any hypothesis, which
chi-square analysis.
CHI-SQUARE TEST
frequencies.
c =(O-E)2/E
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Where,O=Observed frequency
F F
57
YES 100 50.0 50.0 Accept
DON’T
NO 50.0
Total 200
F F
DON’T
NO
Total 200
58
Residuals
59
Reject the null hypothesis if the calculated value
value.
value.
TEST STATISTICS
Ratio analysis is
primarily used to
Investment is the compare a
purchase or creation company’s
of assets with the financial figure
objective of making over a period of
gains in the future. time.
df 3 3
Level of significance……….0.05
Critical value………………………43.0
Calculated value……………………73.880
60
From the above analysis, it could be seen that in the
first test, Investment is the purchase or creation of
assets with the objective of making gains in the future.
CHAPTER FIVE
61
5.1 FINDINGS
discover that
themselves.
62
Capital investment decisions are long-term corporate
structure.
of course, money.
5.2 SUMMARY
time.
5.3 CONCLUSION
64