ABSTRACT
This study set out to study
the Effect of financial statement in assessing the performance of companies and
in guiding investment decisions. Financial statement provide the base statement
its investment decision it is therefore critical that it should provide a
reliable permanent history of the financial activities of organization record
in archeological diary of measured event presented in orderly and
systematically manner. It readily communicate primarily financial information
in nature investors and other practice who make effective use of the
information for an investment decision posited by (Onukwu 2018) in regard to
financial liquidity, profitability and ability of an entity, is an indication
that these information posited to be presented in publications are the balance
sheet, profit and loss account and cash flow statements in which case presented
in an accounting manner and ethics. Financial statement in
accounting formation is an information needed by varieties of uses classified
into internal and external users as posited by American Institute of Chartered
Public Accounting (AICPA) is an evident which reveal the relative importance of
such information to government present and potential direct financial interest
as posited to ‘Peter” indicated the statement report shall use all disclosure,
materiality, consistency, conservation, and formation according to Paul (2018).
Guiding the financial statement analysis instituting comparativeness is the
legal frame work defining its requirement disclosure to the consumption of its
users.
CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
Corporate organizations owe a
duty to fully disclose matters concerning their operations so as to aid
investors in making investment decisions. Both large and small organizations
in addition to satisfying the
legislating requirement tend. to retain existing investors and to attract
potential ones through the publication of their financial statements where the
capital stock of a corporation is widely held and its affairs are of interest
to general public. The discussions and illustrations of the study will be
centered on the financial statement presented to shareholders and also
available for potential investors, bond holders and trade creditors as a tool
of information for investment decision. Financial statement based on result on
past activities are analyzed and interpreted as a basis for predicting future
rate of returns and assessment of risk.
Financial statement provides
important information for a wide variety of decision, investors draw
information from the statement of the firm in whose security they contemplate
investing. Decision makers who contemplate acquiring total or partial ownership
of an enterprise expect to secure returns on their investment such as dividends
and increase in the value of their investment [capital gain]. Both dividends
and increase in the value of shares of company depends on the future
profitability of the enterprise. So investors are interested in future
profitability. Past income (dividend) data are used to forecast returns for
future investment and increase in share prices.
Managers are responsible for
the overall performance of the firm they make or take decision in relations to
available information; therefore they need relevant information readily made
available to make an effective decision for the purpose of this research.
1.2 STATEMENT OF THE RESEARCH PROBLEM
The problem confronting most
business organization and investors are in the area of the area of evaluation
of financial ratio is often neglected until a problem occurs. The basic analytical
tools for the comparative income statement, profit and loss account and balance
sheet. It is observed that both investors and manager are either not aware of
the relevance or otherwise issue it source? In addition to lack of adequate
valuation statement “Fact information” from business to investors there is the
lack of analytical intellect on the part of the investors to access the
reliability of financial statement. Also the intention of the study the
financial statement and trend to future timely present figures and the figure
only have meaning in relation to when compared with other fact.
However, these problems
observed in the preceding paragraph tend to scare away the both existing and
potential investor who rather prefer to hold liquidity than investing in
business organization that are surrounded by bond of uncertainty until a
specific techniques are developed to mean sure liquidly, profitability,
solvency etc.
The interest of this study
will be clustered around the financial statements presented to the
shareholders, investors, bond holder, and trade creditor, as important
information for investment decision. Finally it is beyond the scope of this
study to adequately look into the entire above mentioned problem and to suggest
possible solution will reveal key factors responsible for under capacity
utilization of effect of financial statement in assessing the performance of
companies and in guiding investment decisions.
Chapters: 1 - 5
Delivery: Email
Delivery: Email
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