CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Financial reports provides an overview of a business profitability

and financial condition in both short and long term. They are necessary

sources of accounting information about companies for wide variety of

users. In. every business there needs information. This information

needs ranges from financial production marketing etc. Generally the

larger the organization the greater the management need for

information. Financial report plays a vital role in decision making process

of business organizations. The main purpose of financial repots is the

provision of financial information as a record making. It has been said

that accounting is the language of business. It might also be said that

the ability to apply accounting knowledge is critical to success in

business: A business prepares various report at the end of each fiscal

period. This report summarizes the changes that have taken place

during the period. For this financial report to be useful the data be

presented in such a way that the user will recognize Similarities

differences and trends form one period to another to enable them make

decisions. The accounting information contained in the financial reports

enables management to make more inform decisions. Financial report

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should provide adequate information in all areas of organization and

economic activities; it should be able to disclose clearly the nature and

accurate accounts of the transactions fun which the true and fair view

financial position of the organization can be ascertained. Financial

reports serve a lot of useful purpose to different users namely

shareholders Creditors Banks government agents employees

potential investors and the management of the entity it self. The above

identified groups of persons rely on the information supplied by the

given firm through financial reporting in which they have interest to

ascertain the organization‟s state of affairs which serves as an important

guide in deciding the extent to which they commit their fund. It is the

“communication of financial information useful for decision making such

as investment credit and other business decisions” such communication

include general. Purpose financial statement balance sheet equity

report cash flow reports and notes to these statements.

1.2 STATEMENT OF THE PROBLEM

The problem of this research is that the management does not know

the various ways of presenting financial accounting reporting which

often affects managerial decision making. There are no proper allocation

of resources of the organization which leads to non-achievement of the

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profit maximization objective. Also the inability of the management to

recruit trained and professional personnel as a result the quality of the

decision made by this organization are very poor.

1.3 OBJECTIVE OF THE STUDY

The research work covers the effect of financial accounting

reporting on managerial decision making.

The studies have the following objectives:

To know whether the various ways of presenting financial accounting

reporting have any effect on managerial decision making in the

company.

To examine the attitude of management in the allocation of resources

which often leads to achievement of profit maximization objective.

To determine the level of which management recruit trained and

professional personnel which leads to quality decision making.

1.4 RESEARCH QUESTIONS

Based on the objectives the following research questions were

developed:

Does the various ways of presenting financial accounting reporting have

any effect on managerial decision making of the company?

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What are the attitude of management in the allocation of resources

which often leads to profit maximization objective?

To what extent does management recruit trained and professional

personnel which leads to quality decision making?

1.5 STATEMENT OF HYPOTHESIS

Because of the above research questions the following hypotheses were

formulated.

HYPOTHESES 1

HO: The various ways of presenting financial accounting reporting does

not have effect on managerial decision making of the company.

HI: The various ways of presenting financial accounting reporting have

effect on managerial making of the company.

HYPOTHESIS 2

HO: There are no proper allocation of management resources which

often leads to profit maximization objective.

HI: There are proper allocation of management resources which often

leads to profit to profit maximization objective.

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HYPOTHESIS 3

HO: Management does not recruit trained and professional personnel

which leads to quality decision making.

HI: Management recruit trained and professional personnel which leads

to quality decision making.

1.6 SIGNIFICANCE OF THE STUDY

The significance of this study is that it shows the effect of financial

reports in the operation of the organization. This research is beneficial to

internal and external users of financial report. The financial of this

research will help managers determine the method of financial needs

that will help in realization of their corporate objectives. The study will

help the management to know the experts (accountants) that will be

able to prepare an annual report that will enable the management to

make well-informed decision that will enhance profit maximization. It will

enable the external users to know whether the organization is making

profit in coder to invest more. Thi0s study will also serve us resource

material for other researchers for further research in related areas.

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1.7 SCOPE AND LIMITATION OF THE STUDY

The research work covered the whole of Enugu State manufacturing

companies but due to certain constraints the research is restricted to

Nigeria Bottling Company PLC. Thus the research investigate the effect

of using financial reports in making management decisions.

The limitation of this study is the time factor. Since the researcher

carried out the research of the same time with her studies there was

limited time for to cover all the necessary areas of the research study.

And also lack of audience from the despondence.

1.8 DEFINITION OF TERMS

ANNUAL REPORT: this is a comprehensive report on a company‟s

activities throughout the preceding year. Annual reports are intended to

give shareholders and interested people information about the

company‟s activities and financial performance.

MANAGERIAL DECISION: This is the decision concerning the

operating of the firm such as the choice of the firm size firm growth

rate and employment.

INFORMATION: This can be seen as data which have been processed

into a form meaningful to the recipient (receiver)

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ORGANIZATION: Is an organized body of people working together for

the pursuit of a particular purpose (s) called organization goals.

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REFERENCES

Igben R. (2009). Financial accounting made simple Lagos: Roi publication.

William L. (2008). An introduction to financial management. London: McGraw

–Hill Publication.

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