FINANCIAL STATEMENT ANALYSIS AS A MEASURE OF PERFORMANCE AND EFFICIENCY IN BANKING SECTOR (A CASE STUDY OF FIRST BANK PLC)
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Study Level: BTech, BSc, BEng, BA, HND, ND or NCE
1.0 INTRODUCTION TO THE STUDY
The strength of any organization can be properly assessed only from it financial position as reflected in the accounting data.
The important of corporate financial reporting view of development in the money market and charging capital market cannot be emphazed.
Accounting information gives to the summary of the economic performance and the situation of a business enterprises as well as its profitability. They also review the provides of there resources have been effectively utilized. The use of the information provide virtually of modern society.
Decision taken on the basis of such information affect the live of million of people all over the world with ever increasing number of user whose interest are becoming more and moe diverse, the need for proper understanding of such financial statement can not be over emphasis. In order to arrive at a right conclusion, it is imperative that he account regard a time and fear review.
Corporate reporting service as an effective main of communicating financial and other data by companies shareholders prospective investor, government authority and general public. Annual report and accounts are therefore analyze the information contained in the financial statement. The income statement and the balance sheet can be of great benefit to the some of the users when properly analyzed.
One of the most important functions of financial accounting is to report information to external parties, the set of people who do not take part in the day to day management of the business such as eh creditor, shareholders, investors, banker are individual and organization that. Finance the firm’s operation. Each of these parties had an interest in analyzing and interpreting one or more broad areas of business, especially its financial soundness and stability the efficiency of its management as well as future prospect for an investors.
1.1 STATEMENT OF PROBLEM
- Ratio of the case study does not have meaning except is compared with same standard.
- The interpretation of ratio rendered in valid as a result of change in the value of money.
- The difference in definition of terms in the balance sheet and income statement make the interpretation of ratio different
- The ratio calculate at a point in time are less informative and effective as they suffer short term changes.
- The wide range of the bank operation have made it difficult to develop a meaningful set of industry average for comparism.
1.2 RESEARCH QUESTION
- Does ratio analysis have an effect on the performance of banks?
- What are the significant roles of financial statement and balance sheet of the case study?
iii. How does the bank control the risk of illiquidity?
1.3 OBJECTIVE OF THE STUDY
Financial statement analysis provides a method fore assessing the financial strength and weakness of an enterprises using information found in its financial statement.
The annual report and account, the objective of this analysis is to gain and understand the firm’s current financial condition as well as its nature prospects which in tern can serve as the basis for decision making in the same height of the above objective of financial statement analysis of the objective research work with second folds is:
- To determine the efficiency of the management of first bank plc.
- To accomplish this objective financial ratio that measure efficiency of an enterprises such as gross profit margin, net profit margin, return on total asset and net asset and other necessary ratio would be identified calculate for period of one year.
- To analyze the role of first banks of Nigeria of the proffered sector of the economy such as industry and agriculture
- To appraise first bank contribution to the economic development
- To analyze some of the problems confronting the first bank of Nigeria in the case of carrying out their services.
- To make recommendation based on the finding of the study.
1.4 RESEARCH HYPOTHESIS (HO, HI)
Ho: Does financial statement analysis have a negative impact on performance efficiently in banking industry.
Hi: Financial statement analysis has an impact on performance efficiency in the banking industry.
1.5 SIGNIFICANCE/JUSTIFICATION OF THE STUDY
The significance of the study is to show the clear understanding of financial statement analysis, because of recount studies have emphasized the need to widen the area of responsibility of financial statement to take into cognizance the numerous users group and their drivers interest.
1.6 SCOPE AND LIMITATIONS OF THE STUDY
- Time constraint; there has been a restriction concerning time allowed for the research work.
- Lack of finance: There has been a weak financial capability faced by the researcher while conducting the research work.
- Insufficient data: The researcher could not afford to obtained some essential material in the course of research work.
- Incoperative attitude and in accurate information given by the respondent is another challenges faced by the researcher.
1.7 DEFINITION OF KEY TERMS
Efficiency: The quality of doing well with no waste of time or money.
Sector: These a part of area of activity especially of a country economy.
Emphasized: To give extra force to a word or phrases when you are speaking especially to show that it is important.
Investor: This can refer to as a person or an organization that invest money in business.
Performance: This is the act of performing a play convert of some other form of entertainment or the act or process of performing a task and action.
STABILITY: It means that quality or state ob being steady and not changing or being disturbed in any way
CONFLICT: This is a situation in which people groups or countries are involved in a serious disagreement or argument.
INFORMATION: This can be defined as a fact or detail written on documents that are sent from one person to another, that form a special language.
ANALYSIS: This can be defined as a detail study in order to understand more about it.
COGNIZANCE: This a knowledge or understanding the important of the case study.
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