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PROJECT TOPIC: FINANCIAL STATEMENT ANALYSIS AS A MEASURE OF MANAGEMENT PERFORMANCE AND EFFICIENCY

Project Body:


CHAPTER ONE

1.1 INTRODUCTION

The great value of corporate financial reporting in view of development in both the money and the capital market cannot be over-emphasized. The success of any enterprise can be properly assessed only from its financial position as reflected in the financial data. The accounting information summarises the economic performance and the situation of a business enterprises. In order to arrive at the correct conclusion, it is important that the account disclose of true and fair view. Corporate reporting serves as an effective medium of communicating financial and other data by companies to the shareholders, prospective investors, government authorities and the general public. Annual reports and account are the most efficient means of communicating the financial information to the shareholders and other interested group. Therefore, annual reports are central to corporate reporting. Every organisation prepares  their financial statement in such a way to include profit and loss account shows the result of operation over a particular period while the balance sheet shows the financial position at a particular date. Financial statements make use of financial data in the balance sheet and profit and loss account in order ot enable the uses of financial statement have an insight into the better understanding of the financial statement. The balance sheet and the profit and loss account can be of great benefit to the users when properly analysed. In order for the users of annual reports and accounts so as to understand the financial statement. When confronted with framework of analysis available to make attempt to get some facts from what is important from the ones of less important data. One of the essential of financial accounting is to report the information to external interested parties. Those that do not participate in the day to day activities of the business such as shareholders, investors, bankers etc. There are individuals and organisations that finances the firms operations. Each of these parties has an interest in analyzing and interpreting one or more broad areas of business especially its financial soundness and stabilizes the efficiency of its management as well as the future prospect for an investor.

1.2 STATEMENT OF THE PROBLEM

The research question centres on what the research work is designed to achieve with some assumption, work is designed to achieve with some assumptions, speculations that are tentatively accepted or an investigations purpose. It will extensively deal with the purpose of the research work such as:

i.             What is the various evaluation methods used on financial analysis?

ii.           Has financial analysis have any effect in corporate planning and growth?

iii.          Why are the returns offered on investment by a company relatively different from other companies with similar risk?

1.3 PURPOSE OF STUDY

Annual reports and account provides a method of assessing the financial strength and weakness of an enterprises using information found in its financial statement. The purpose of this analysis is to gain an understanding of the firm’s current financial condition as well as the future prospect, which in turn can serve as the basis for decision making. The purpose of this research work are of two folds: One, it seeks to determine the efficiency of the management of any case study, Literamed Publications Limited. To accomplish this objectives, the financial ratio that measures the efficiency of an enterprise such as gross profit making, net profit margin, returns on total assets, net assets and other necessary ratio will be calculated and compared over a period of five years (2001-2005). Second, the calculations of other types of ratio to determine the overall performance of the management of the Literamed Publication Limited and calculation will be compared over a period of five years, (2001-2005). These ratios are liquidity ratio, profitability ratio, debt and gearing ratio.



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