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CHAPTER ONE

INTRODUCTION

1.1BACKGROUND OF STUDY

Financial 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 to the need to study the relevance

of the financial ratio in the appraisal of small scale business.

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1.2 STATEMENT OF PROBLEM

The study is beset by a lot of problems which include:

- Problems of non-challant attitude on the use of financial ratio in the interpretation of

accounting records of small scale business

- Lack of available ratio for measuring the state performance of a company

- Lack of competent management

- Obsolete use of data.

1.3 OBJECTIVES OF STUDY

The main purpose of this study is to identify and consequently analyze the relevance

of financial ratios in the appraisal of small scale companies in Cross river state.

In view of the above the researcher intends to find the following:

- To establish the extent to which accounting ratio can be use to interpret accounting

records of small scale business.

- To identify the available ratio for measuring the state of performance of a

company.

- To established the effect of ratio analysis on the users of financial statement.

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- To ensure current data‟s are use in small scale business.

1.4 RESEARCH QUESTIONS

The study will examine the following questions:

- Dose non-challant attitude in the use of financial statement affects small scale

business?

- Is ratio analysis a measure of quality into consideration when measuring the

performance of the firm?

- Does obsolete use of data affect small scale business?

- Is ratio analysis a dependable tool of financial analysis?

1.5 RESEARCH HYPOTHESES

Based on the problems and objectives the following hypotheses are formulated for

study.

Hypotheses1

H0: Non-challant attitude in the use of financial statement does not affect small scale

business

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H1: Non challant attitude in the use of financial statement affects small scale

business.

Hypotheses 2

H

0

: Obsolete use of data does not affect small scale business

H

1

: Obsolete use of data affects small scale business

Hypotheses 3

Ho: Lack of competent management does not affect small scale business.

H

1

: Lack of competent management affect small scale business.

1.6 SIGNIFICANT OF THE STUDY

This research work will help in determining how the performance of a company can

be measured through the use ratio as a tool of financial analysis.

The study will help in reflecting a qualitative relationship between financial statement

of a different period and different firms. It will serve as a reference to other

researchers with the mind of having in depth insight about ratios and its performance

measuring abilities.

1.7 SCOPE OF THE STUDY

This study as the case may be covers the relevance of financial ratio analysis in the

appraisal of small scale business with particular reference to Mr. Biggs incross river

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state. The study takes a holistic approach in its research to unveil the relevance of

financial ratio analysis in the appraisal of small scale businesses.

1.8 LIMITATION OF THE STUDY

The limitations involved in this research work include:

-Hostility and non cooperation on the part of the respondents.

-The levels of ignorance on ratios and illiteracy were very high e.g some business

officials refused to answer questions as they felt they would be indicated.

-Also financial implications were soaring high and this imposed certain restrictions

-Finally the constraint of time was a limiting factor as all the areas of interest were

not covered by the researcher.

1.9 HISTORICAL BACKGROUND OF THE CASE STUDY

The company study Mr. Biggs plc. The research will delve into the relevance of

financial ratio maintain in those organization in order to access the element the

contain the role they play to interested parties both within and outside the

organisations.

Mr. Biggs plc

Mr. Biggs a division of U.A.C Nigeria plc which is regarded as one of the fastest

growing quick service restaurants. It was founded in 1986 and since then has

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restaurant services. Mr. Biggs is Nigeria first chain of fast food restaurant owned by

conglomerate UAC of Nigeria plc. There are currently around first drive through

restaurant with another four locations in Ghana. The restaurant is styled after mc

Donald‟s and is known for its red and yellow colour scheme. Mr. Biggs history

begins with coffee shop inside Kingsway Department stores in the 1960‟s. In 1973

these shops were rebranded as Kingsway Rendezvous which became Mr. Biggs in

1986.The chain rapid expansion after becoming one of the first Nigerian companies

to sell franchises to investors. Mr.Biggs specialty is the meat pie. a common lunch

might also include scotch egg a sugared donot chicken and a soft drink.

Whilewestern fare such as hamburgers are served. Nigeria delicacies such as jollof

rice and moi-moi are more popular. Birthday cakes are also a popular product and

Mr. Biggs bakery offers cake and pastries.

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Project Information

  • Price

    NGN 3,000
  • Pages

    78
  • Chapters

    1 - 5
  • Program type

    barchelors degree

Additionnal content

Abstract
Table of content
References
Cover page
Questionnaire
Appendix

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