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There are various numbers of methods used by accountants and financial analysts to analyze financial state of a company. The purpose of the financial statement analysis is to provide information to financial managers and analysts to make thorough decisions about their business. Assessing financial position and performance of an enterprise is a skill that every manager needs to have to make the best and right decisions for the company. The analysis of the financial statements is a method of comparing, judging or valuate situation of particular parts of balance sheet, on the basis of which important decisions are made. So, financial statement analysis is an analysis of balance sheets for the past, present and future of the enterprise. Balance sheet position values separately do not have high analytical significance, but if we compare them to the values of other balance sheet positions then their comparative value increases. Financial statement analysis is a study of the company’s financial statements by analyzing the reports. Report analysis is a tool that easily calculates and interprets reports that are used by investors, creditors, enterprise executives and others. Financial Analysis is the process of assessing the financial position of a company by analyzing its stability, viability and profitability. One of the primary objectives of financial analysis is to recognize changes in financial trends, to help measure the progress made by an enterprise and identify a relationship to draw a logical conclusion on the performance of the company. Another major aspect of a financial analysis is comparing the performance of the company with its competitors (Laitinen, 2012).

The essence of financial statements’ analysis from the position of a user is to review and evaluate the information in the reporting to obtain reliable conclusions about the past state of an organization aiming at foreseeing its functioning in the future. Evaluation of financial statements is a process by which the past and current financial position and performance of the company are assessed. Because of financial statements’ analysis, the company’s most important characteristics are also determined, which testify, in particular, about its success or the risk of bankruptcy (Izuymov et al. 2017). For different users, in terms of the scale of its implementation, the analysis of financial statements depends on a specific goal. At the same time, the analysis and direction of work while analyzing financial statements can be different. Therefore, company’s financial statements can be useful for different interested parties (Bondarenko, 2010).

Preparation of financial statements is important for the successful conduct of the activities of any enterprise. It is connected not only with summarizing the results of its financial and economic activities for a certain period, but also with determining the quality of company’s relations with public authorities that control the conduct of any economic activity in the state, including the activities connected with the receipt of profit (Gapsalamov et al., 2017; Bittman et al., 2017). Thus, depending on how timely the financial statements are presented by the company, there are penalties imposed on it, the frequency and severity of conducted tax audits. It is also an important fact that timely and high-quality financial statements are required to obtain a general picture of a legal entity’s performance, its effectiveness, financial stability and other indicators (Korableva and Kalimullina, 2014). That is why the company’s financial statements are important for its management and for external bodies

The efficient use and effective interpretation of financial statements is necessary as leading cause of failure and financial distress is only the poor financial management of business (Coleman 2012; Carter & Van Auken, 2015; Headd 2013; Wiklund & Shepherd, 2015).

Owing to dire consequence that improper accounting practices can have on enterprises producing incomplete financial statements, it is imperative that the accounting practices of enterprises supply holistic and pertinent financial information needed to improve economic decisions made by entrepreneurs (Amidu and Abor, 2005). Information gathered revealed that majority of enterprises prepare financial statements annually yet most of them have difficulty in accessing finance from financial institutions and also difficulty measuring their financial performance based of the accounting records kept due to inadequacy of the accounting records to help prepare sound financial statements representing the true state of financial standing of the enterprises.


Managerial decision is one of the keys to success in an organisation. And as such, management of a given organisation makes decision based on financial performances prevailing in such establishment.

Half of all start-up businesses fail during the first 5 years of their life cycle (Small Business Administration, 2014). The lack of financial analytical strategies on the part of business owners is a factor that affects business success (Fraser et al., 2015). These failures not only have negative impacts for the entrepreneur (Fraser et al., 2015) but also have adverse consequences for a country’s economy (Lussier, 2014) as the increase in economic activities supports and strengthens a country’s ability to generate more tax revenues. As governments are finding ways to boost economic activities, they have recognized the contributions of businesses to growth and economic development for their countries (Lussier, 2014). Given the critical role that start-up companies have within a country’s economy, when a business fails the affect extends beyond the local community.

Entrepreneurs face many uncertainties that affect business success (Fritsch, Brixy, & Falck, 2016). Depending on the strategies that a company uses, a firm can realize successes or failures. If business owners were to understand and implement clear strategies and processes, their operations would become more effective and efficient, determining their levels of success (Olson, Slater, & Hult, 2015). To do otherwise would place the firm in a compromising position that disrupts its ability to become successful and sustainable, resulting in business failure (Fraser et al., 2015). Notwithstanding the context of potential causes of business failure within the first 5 years of operation, it is important that business owners clearly understand the business problem within their organization. In doing so, they become more aware of potential issues, and acquire the strategies and knowledge to adequately deal with and find ways to mitigate the impacts of earlier failure.

The lack of knowledge and strategies for implementing key financial business processes negatively affects business operations (Blackburn, Hart, & Wainwright, 2013). An estimated 30% of businesses fail within their first 2 years of operation, and more than 50% of businesses fail within their first 5 years (Small Business Administration, 2014). The general business problem is the inability of some managers to make sustainable financial-based decisions for surviving the first 5 years of operation. The specific business problem is that some retail business managers lack strategies and processes to implement financial analysis for decision making to sustain their operations beyond the first 5 years


The major purpose of this study is to examine financial statement analysis as a tool for determining the viability of enterprises. Other general objectives of the study are:

  1. To determine the extent to which financial statement analysis is carried out among these businesses.

  2. To examine the nature of financial statements of an organization.

  3. To examine the impacts of financial statements analysis on the viability of Enterprises.

  4. To examine the challenges facing Enterprises in adopting effective financial accounting reporting in Nigeria.

  5. To examine the relationship between financial statements analysis and viability of enterprises.


  1. To what extent is financial statement analysisbeing carried out among these businesses?

  2. What is the nature of financial statements of an organization?

  3. What are the impacts of financial statements analysis on the viability of Enterprises?

  4. What are those challenges facing Enterprises in adopting effective financial accounting reporting in Nigeria?

  5. What is the relationship between financial statements analysis and viability of enterprises?


Hypothesis 1

H0: Financial statement analysishas no significant impact on the viability of enterprises in Nigeria.

H1: Financial statement analysis has a significant impact on the viability of enterprises in Nigeria.

Hypothesis 2

H0: Financial statement analysis has no significant relationship with the viability of enterprises in Nigeria.

H1: Financial statement analysis has a significant relationship with the viability of enterprises in Nigeria.


The researcher hope that this analytical research will play its part in giving attention to the success of an organization, to the organization management as well as users of the financial statements. Also it will be useful for the management on setting of and selection of appropriate financing and operating strategies to be competent in any organization. In addition to that, it helps the researchers to employ their theoretical knowledge in to practice. Besides, the study and frame work designed to evaluate the viability of organizations will be expected to serve as an input for future researchers interested in assessing the performance of an organization using financial statements.


The study is based on financial statement analysisas a tool for determining the viability of enterprises, case study of Access Bank Plc, Lagos state.


Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.


Financial Analysis: Financial analysis is the process of evaluating businesses, projects, budgets, and other finance-related transactions to determine their performance and suitability. Typically, financial analysis is used to analyze whether an entity is stable, solvent, liquid, or profitable enough to warrant a monetary investment.

Analysis:A systematic examination and evaluation of data or information, by breaking it into its component parts to uncover their inter-relationships or opposite of synthesis. An examination of data and facts to uncover, understand the cause, effect and relationships, thus providing basis for problem solving and decision making.

Financial Statement: Is a summary report that shows how a firm has used the funds entrusted to it by its stockholders (shareholders) and lenders, and what is it current financial position. The three basic financial statements are the (1) balance sheet, which shows firm’s assets, liabilities, and net worth on a stated date; (2) income statement (also called profit & loss account), which shows how the net income of the firm is arrived at over a stated period, and (3) cash flow statement, which shows the inflows and outflows of cash caused by the firm’s activities during a stated period.

Performance:The accomplishment of a given task measured against preset known standards of accuracy, completeness, cost, and speed. In a contract, performance is deemed to be the fulfilment of an obligation, in a manner that releases the performer from all liabilities under the contract.

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