Financial Statement Analysis As A Measure Of Performance And Efficiency In Banking Sector (A Case Study Of First Bank Plc)

Project and Seminar Topics with material for Banking and Finance

Financial Statement Analysis As A Measure Of Performance And Efficiency In Banking Sector (A Case Study Of First Bank Plc)

Table of Content

  • Title Page
  • Certification
  • Dedication
  • Acknowledgment
  • Table of Content
  • Proposal

Chapter One

1.0 Introduction to the Study.

  • 1.1 Statement of Problems.
  • 1.2 Research question
  • 1.3 Objectives of the Study
  • 1.4 Research Hypothesis (Ho, Hi)
  • 1.5 Significance/ Justification of the study
  • 1.6 Scope and limitation of the study
  • 1.7 Definitions of key Terms
  • 1.8 Plan & organization of the study

Chapter Two

2.0 Literature Review

  • 2.1 Historical background of the study
  • 2.2 Nature of the Financial Statement Analysis
  • 2.3 The principle Tools of Analysis
  • 2.4 Nature and purpose of financial Ratio
  • 2.5 Users of financial Statement Analysis
  • 2.6 Shareholders investment Ratios
  • 2.7 Debt and Gearing Ratios
  • 2.8 Strengths of financial Ratio
  • 2.9 Weakness of Ratio Analysis

Chapter Three

3.0 Research Methodology

  • 3.1 Research Design
  • 3.2 Data Collection Method
  • 3.3 Validity of Ratio Analysis
  • 3.4 Reliability of a Data
  • 3.5 Method of Data Analysis

Chapter Four

4.0 Data Analysis and Presentation

  • 4.1 Data Presentation
  • 4.2 Data Analysis
  • 4.3 Findings

Chapter Five

5.0 Summary Conclusion and Recommendations

  • 5.1. Summary
  • 5.2. Conclusion
  • 5.3. Recommendations
  • References

Chapter One

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 no 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 firms 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

  1. Ratio of the case study does not have meaning except is compared with same standard.
  2. The interpretation of ratio rendered in valid as a result of change in the value of money.
  3. The difference in definition of terms in the balance sheet and income statement make the interpretation of ratio different
  4. The ratio calculate at a point in time are less informative and effective as they suffer short term changes.
  5. 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

  1. Does ratio analysis have an effect on the performance of banks?
  2. What are the significant roles of financial statement and balance sheet of the case study?
  3. 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:

  1. To determine the efficiency of the management of first bank plc.
  2. 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.
  3. To analyze the role of first banks of Nigeria of the proffered sector of the economy such as industry and agriculture
  4. To appraise first bank contribution to the economic development
  5. To analyze some of the problems confronting the first bank of Nigeria in the case of carrying out their services.
  6. 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

  1. Time constraint; there has been a restriction concerning time allowed for the research work.
  2. Lack of finance: There has been a weak financial capability faced by the researcher while conducting the research work.
  3. Insufficient data: The researcher could not afford to obtained some essential material in the course of research work.
  4. 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.

1.8 Plan and Organization of the Study

The research work has been divided into five chapters for case of presentation of the fact and figure gather.

Chapter one contain the introduction, statement of problem, research question, objective of the study, research hypothesis (Ho, Hi) significance/justification of the study scope and limitation of the study, definition of the key term and plan and organization of the study chapter two treat literature review which include various definition and historical background of the First Bank of Nigeria Plc. Nature of the financial statement analysis the principle tool of financial ratio, nature and purpose of financial ratios, users of financial statement analysis, classification of financial ratios and profit before taxation.

Chapter three present research methodology, research design. Data collection method, validity of ratio analysis, viability of a data and method of data analysis.

Chapter four discuss data analysis and presentation, data interpretation and test hypothesis financially.

Chapter five throw light on summary of finding, conclusion, recommendation and reference.

Chapter Five

5.0 Summary, Conclusion and Recommendation

5.1 Summary

The research work has attempted to highlight the importance of financial statement analysis, using financial ratio to assess management efficiency and performance as a whole, not forgetting its important to outsider e.g. shareholder etc. the basic types of financial ratio ha? been used to analysis and interpret the financial of First Bank of Nigeria Plc for the purpose of this research study, he basic types of financial ratio have been segmented into five different group, liquidity ratio, probability ratio, efficiency ratio, shareholders investment ratio, and debt and gearing ratio.

The liquidity ratio embraces the current ratio acid ratio or quid: trust ratio as well as the cash ratio the profitability ratio are made up of gross profit margin, net profit margin return on total assets, return on capital employed (ROCE) and return of equity.

The efficiency ratio includes fixed asset turnover and net asset turnover. The shareholders investment ratio includes the earning per share (EPS), dividend per share (DPS), dividend cover and finally, the debts and gearing ratio includes the total ratio, the total debts, ratio and investment coverage ratio.

The researcher have been able to give reasonable and adequate comment on each off those ratio analysis computed based on information gathered from the annual report and account of First Bank of Nigeria Plc and they have been treated in struck confidence at the end of chap are two where all ratio were highlighted the summand of an extract financial statement of the company at which the analysis are based on is also not left out for the purpose of benefit.

5.2 Conclusion

In, conclusion the study is able to come up with some reasonable as well as educative price. The combination of the techniques for financial statement analysis brought about the hidden feature of financial statement. By mere looking at financial statement does not give an investor or enough information. Despite the fact that financial statement analysis techniques there all still unresolved issues which remain with the data itself (the financial statement). The effect of inflation historic cost issues are major issue to be talked.

Nevertheless, the study brought to the mind of the researcher an opportunity to under take a wider in the field of financial statement analysis as a basic for performance evaluation. It is suggested that further investigation into heavy current liability carries by the firm should be investigated to identify liquid. In condition, the company First Bank of Nigeria Plc management is sufficient and their performance is quite goes and encouraging it should ‘be emphasis that a continuous assessment of the company performance is important as this will afford the management to mirror their operation and strategies.

5.3 Recommendations

Recommendations as regard the management efficiency and performance are presented as suggested by the analysis carried out from the analysis done, the company, first bank of Nigeria Plc, Lacked adequate marketing capital.

  1. The liquidity ratio calculated for the year covered by the study indicated ability of company’s current asset to efficiency cover the current liability and this effect means that the company may be able to meet its short term obligation when they fall due and this lead to solve situation.
  2. Most firm with inadequate working capital working capital tied up in stock although the level of stock of a firm depend on the nature of the business investment will move stock and greatly affect the profitability of the country.
  3. It is recommended that the company should reduce investment in stock or better still increase it stock turnover. In addition, the cash ratio computed for all amount of cash vis a vis current liabilities. If the company is to settle all its current liability with cash it will be unable to do so. Cash as the most current asset which is needed for the operation of any business has to be carefully planed.
  4. The proportion of total funds provided by outsiders all the year under study.

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