Evaluation of Ratio Analysis On Investment Decision Making
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
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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.
investment opportunities:
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
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Managers use models such as the CAPM or the APT to
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measured at a point in time, while investment can only
be defined as:
It = Kt - Kt-1
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How is the theory of investment different from the
to the other.
consideration.
33
CHAPTER THREE
population;
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(ii) It is a design in which a structure and systematic
data;
workplaces;
brought;
statistically; and
1995).
35
method, the sample of the respondents are selected in
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
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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.
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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
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Cross-tabulated analysis
Hypothesis testing
TABLE 4.1
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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.
140
-
Frequency
120
-
100
-
80
--
60
-
-
40
TABLE 2. GENDER
MAIL OF THE FEMALE
RESPONDENTS
20 Gender
-
0
49
Frequency percentage Valid Cumulative
Percent Percent
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
statuses of the
140 respondents.
FIGURE 4.2: THE SIMPLE BAR CHART OF THE DATA ON THE MARITAL
120
STATUSES OF THE RESPONDENTS
100
-
Frequency
-
80
-
-
60
-
-
40
-
-
20 50
MARRIED SINGLE
Marital
0 status
TABLE 4.3. MARITAL STATUS OF THE RESPONDENTS
From figure 4.2 above, it is shown that the married respondents have
the modal frequency of 130 out of the 200 respondents while the
RESPONDENTS.
60
51
Percent
(years) Percentage
10.
52
Figure 4.4 below shows the pie chart of the data on the
respondents.
OND DIPLOMA
FIRST DEGREE
5%
15% OND
SECOND DEGREE 10%
20%
HND
80%
FIRST DEGREE 10%
TABLE 4. 5 EDUCATIONAL
SOURCE: from the data QUALIFICATION
in table 1. OF THE RESPONDENTS
Total 200
53 100.0 100.0
From figure 4.4 above, the Educational Qualifications are Diploma,
O.N.D, First Degree, Second Degree and NIM and the subtended
angles in degrees are equal to 180, 540, 1440, 360, 720 and 360 and
200 respondents
NO 12
YES NO DON’T 2
ANSWER Total
19
KNOW
91
DIPLOMA 6 2 7 26
2
OND 31
19
HND
60 31 21
FIRST
- 9 200
DEGREE 10 9
SECOND 31
DEGREE 21
NIM 100 43 11
Total
39
939
The above table shows that
Ratio analysis the
is primarily totala company’s
used to compare of 100
YES Financial figures over a period of time NO
NO DON’T Total
respondents (out of 200 said YES. This proved that KNOW ANSWER
DIPLOMA 10 10
FIRST
TABLE
DEGREE 7. Cross-tabulation
10 2 9 19
SECOND
DEGREE
54 40 40
NIM 21 21
out of 200 said yes. While 40 did not agree with the fact.
test of significance.
chi-square analysis.
CHI-SQUARE TEST
frequencies.
c =(O-E)2/E
Where,O=Observed frequency
F F
DON’T
NO 50.0
Total 200
58
Observed Expected Residual Decision
F F
DON’T
NO
Total 200
Residuals
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
Critical value………………………43.0
Calculated value……………………73.880
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CHAPTER FIVE
5.1 FINDINGS
discover that
themselves.
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discover its STRENGTHS AND WEAKNESSES as
of course, money.
5.2 SUMMARY
time.
5.3 CONCLUSION
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Capital investment decisions are long-term corporate
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