RELEVANCE OF FINANCIAL RATIO ANALYSIS IN THE APPRAISAL OF SMALL SCALE BUSINESS

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Relevance of financial ratio analysis in the appraisal of small scale business  ABSTRACT research work examined the relevance of financial ratio analysis in the appraisal of small scale business with particular reference to Mr. Biggs fast food in cross river state. The study examined the establishing of the extent to which accounting ratio can be used to interpret accounting records of small scale business, finding and analysing the meaning of financial ratio analysis to the researcher knowledge and understanding of financial statement of the company, to establish the effect of ratio analysis on the users of financial statement and to highlight available ratios for measuring the true state of performance of company. The data were collected from both primary and secondary sources, while primary data was collected by the use of questionnaires; the secondary data were based on readings from textbooks, internet and journals. Data from the response to questionnaire was presented using the statistical tool Chi- square. From the analysis, the findings showed that non challant attitude in the use of financial statement affects small scale business; obsolete use of data affects small scale business and also that lack of competent management affect small scale business. It was however recommended that the retained earnings of the small scale business should be properly invested in order to have more capital for business

TABLE OF CONTENT

Title page iApproval Page iiCertification iiiDedication ivAcknowledgement vAbstract vi

CHAPTER ONE: INTRODUCTION

1.1 Background of the study 11.2 Statement ofthe problem 21.3 Objectives of the Study 21.4 Research questions 31.5 Research Hypothesis 31.6 Significant of the study 41.7 Scope of the study 41.8 Limitation of the study 51.9 Historical background of the case study 5

CHAPTER TWO: LITERATURE REVIEW

2.1 Coherent Literature review (Academic review) 72.2Financing of small scale business 92.3 The nature and scope of financial ratio analysis1 22.4 Financial analysis and its uses to firm 152.5 Tools for financial analysis 172.6 Ratio analysis and standard of comparison 192.7 Types of financial Ratio2.8 Relevance of financial Ratio analysis 282.9 Inflation and financial analysis 302.10 Limitations of Ratio analysis 31

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Research Design 333.2 Sources of Data 333.3 Area of Study 343.4 Population of the study 343.5 Sample and sampling techniques 343.6 Viability of the instrument 353.7 Reliability of the instrument 363.8 Method of data analysis 36

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1 Analysis and interpretation of responses 374.2 Analysis of questionnaire 404.3 Test of Hypotheses 50

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Summary of findings 615.2 Conclusion 625.3 Recommendations. 63Appendix 65Bibliography 66

CHAPTER ONE INTRODUCTIO

1.1BACKGROUND OF STUDYFinancial ratio analysis assumes that there is a relationship between certainaspects of the activities of the firm as revealed in the income statements, Accounting figures reported in the financial statement do not provideProfit and loss accountand the balance sheet, which established a pattern of behaviour. The information contained in the financial statement of a company isconnected with the financial well being and performance of the reporting entity, organized to enable users of financial statement to draw a conclusionmeaningful understanding of the performance of the financial position of a firm, except the figure are analyzed with other relevant information throughthe use of financial ratio analysis.Having established the fact that a ratio is useful and reliable in measuring the relationship between two things, this then gives rise..

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