The financial statement prepared by the companies is one of the most important sources of information available to stakeholders for analyzing the strengths and weakness of prospective firms to be invested in. against this background, this research study sought to examine “The use of financial statement in appraising the performance of business organizations. Research questions was raised to identify the problems and 40 questionnaires were distributed to the company (Guinness Nig. Plc). The population of the study was to persons in the organization, data were analyzed base on the findings from data collected and recommendation were also made so that further investigation will benefit from this study.

Title i
Approval ii
Dedication iii
Acknowledgement iv
Abstract v
Table of contents vi
Chapter One – Introduction
1.1 Background of the study 1
1.2 Statement of problem 3
1.3 Objective of the study 4
1.4 Research Question 4
1.5 Significance of the study 5
1.6 Scope of the Study 6
1.7 Limitation of the Study 6
1.6 Definition of Terms 7
Chapter Two – Literature Review
2.0 Introduction 9
2.1 Conceptual Framework 11
2.2 Notes to the Financial Statement 21
2.3 Presentation and Disclosure 22
2.4 Objectives of Financial Statement for Business Organisation 23
2.5 Theoretical Framework 25
2.6 Emphatically Studies of Finance Ratio 25
2.7 Summary of the Study 26
Chapter Three – Research methodology
3.1 Introduction 28
3.2 Research design 28
3.3 Population of the Study 29
3.4 Sample Size 29
3.5 Sample Techniques 29
3.6 Research Instrument 29
3.7 Reliability of the Instrument 29
3.8 Validation of Instrument 30
3.9 Method of Data Collection 30
3.8 Questionnaire Design 33
3.10 Techniques of Data Analysis 31
3.11 Summary 31
Chapter Four – Data Analysis and Presentation
4.1 Introduction 32
4.2 Responses to Questionnaire 32
Chapter Five – Summary Conclusion and Recommendations
5.1 Summary of the Study 42
5.2 Recommendation 42
5.3 Conclusion 43
Bibliography 44
Appendix 45
Questionnaire 461



Background of the Study

The basis for financial planning, analysis and decision making is the financial information needed to predict, compare and evaluate the firm’s earring ability. It is also required to aid in economic decision making investment and financial decision making. The financial information of an organization is contained in the financial statement or accounting reports.
The financial statement generated through the accounting are designed to enable users to draw relevant conclusion concerning the financial will being and performance of the reporting entity. Two basis financial statements prepared for the purpose of external reporting to owners, investors and creditors are the balance sheet and profit and loss account or income statements.
According to Pandey (2004) a typical annual report including the chairman speech, the directors report, the auditor’s report and accounting policy changes. Alliandu (2000) defined financial statement analysis as the judgment process aimed at evaluating the current and past finance positions and result of operation of an enterprise with the primary objectives of determining the best possible estimates and productions about future conditions and performance with the concluded recapitalization of bank and other financial institution by the central bank of Nigeria (CBN). It has become imperative that adequate attention be paid to financial statements analysis and it implication on business decision of business entities are to be regarded sound financial entities.

More also, the Obasanjo’s administration as noted in the NEED policy document in 2004 while setting out its millennium development goals (MDGS) asserted the emphasis placed on ensuring that the Nigerian economy is a private sector driven one and in order to attain this lofty policy objectives, Nigerian corporate entities must ensure that decision taken by them are not only qualitative but also quantitatively sound and this is where financial statement analysis come into play.
Roger el al (1995) asserted that major objectives of every business are solvency and profitability and that interest in the affairs of a company are especially interest in the solvency and profitability. Against this background, this research study seeks to examine the use of financial information in appraising the performance of business organization.
The absolute accounting figures reported in the financial statement do not provide a meaningful understanding of the performance and financial position of a firm.
Therefore, users of financial statement get further insight about financial strength and weakness of the firm of them properly analysis information reported in these statements.
At this junction, this research study will focus on the use of relevant financial ratios in appraising the performance of selected Nigeria companies.

The objectives is to examine how the basis information contained in set of accounts can be computed and interpreted, in this context is comparison. The comparison of the current figures with its own past performance and comparison with other companies in similar trades or companies.
Millichamp (2000) noted that some of the financial ratios having the most significant general applicability to most business situation are:
Activity ratio / performance ratio
Productivity ratio
Profitability ratio
Liquidity ratio
Capital gearing ratio
Investment ration
Each of these ration will be examined in chapter (2) their relevant use, limitations and interpretation.

Statement of the Problem
It is pertinent to note that are of the most important sources of information available to shareholders is the financial statement which contain in the financial reports of companies such as the balance sheet, profit and loss account. The financial statement prepared by a firm at the end of the year is not an end but a mean to an end; hence the absolute figures reported in the financial statement do not provide a meaningful performance that will meet all the financial needs of all groups. This financial statement for appraising the performance of organization, due to inappropriate interpretation of financial statement, many companies have collapsed.