The Impact of Financial Statement in Investment Decision

The Impact of Financial Statement in Investment Decision.

ABSTRACT

This study set out to study the Impact of Financial Statement on Investment Decision. (A case study of Cement Company of Northern Nigeria Sokoto).

Financial statement provide the base statement its investment decision it is therefore critical that it should provide a reliable permanent history of the financial activities of organization record in archeological diary of measured event presented in orderly and systematically manner.

It readily communicate primarily financial information in nature investors and other practice who make effective use of the information for an investment decision posited by (Onukwu 1998) in regard to financial liquidity.

Profitability and ability of an entity, is an indication that these information posited to be presented in publications are the balance sheet, profit and loss account and cash flow statements in which case presented in an accounting manner and ethics.

Financial statement in accounting formation is an information needed by varieties of uses classified into internal and external users as posited by American Institute of Chartered Public Accounting (AICPA) is an evident which reveal the relative importance of such information to government present.

Potential direct financial interest as posited to ‘Peter” indicated the statement report shall use all disclosure, materiality, consistency, conservation, and formation according to Paul (1968).

Guiding the financial statement analysis instituting comparativeness is the legal frame work defining its requirement disclosure to the consumption of its users.

TABLE OF CONTENTS

Title Page …………. i
Certification …………. ii
Dedication ………… iii
Acknowledgement ……………… iv
Abstract ……. v
Table of Content ……… vi

CHAPTER ONE: Introduction

1.1 Background of the study …………. 1
1.2 Statement of the research problem ……….. 2
1.3 Research Questions ……. 3
1.4 Objectives of the study …….… 3
1.5 Research hypothesis ……….. 3
1.6 Significance of the study …………. 4
1.7 Scope of the study …………………… 4
1.8 Limitation of the study …………. 5

CHAPTER TWO: Literature Review

2.1 Introduction ……. 6
2.2 Financial statement as a source of information ……… 6
2.3 Accounting system as a source of institution ……….. 7
2.4 Users of financial reporting …………………. 9
2.5 Standard of financial reporting ……….. 13
2.6 Relationship between balance sheet and income statement ……….. 15
2.7 Financial statement analysis ……….. 17
2.8 Summary ………… 24

CHAPTER THREE: Research Methodology

3.1 Introduction …… 26
3.2 Population of the study ……… 26
3.3 Sample size and sampling procedure ………… 26
3.4 Method of data collection ……. 27
3.5 Research Design ……… 27
3.6 Method of data presentation and analysis ……… 28

CHAPTER FOUR: Data Presentation and Analysis

4.1 Introduction …………… 29
4.2 Data presentation ………… 30
4.3 Testing of Hypothesis ……………… 43
4.4 Summary of findings ……….. 46

CHAPTER FIVE: Summary, Conclusion and Recommendation

5.1 Introduction ……… 47
5.2 Summary …… 47
5.3 Conclusion …………. 48
5.4 Recommendation ………… 48
References ………………. 50
Appendix ……. 51

INTRODUCTION

1.1 Background of the Study

Corporate organizations owe a duty to fully disclose matters concerning their operations so as to aid investors in making investment decisions.

Both large and small organizations in addition to satisfying the legislating requirement tend. to retain existing investors and to attract potential ones through the publication of their financial statements where the capital stock of a corporation is widely held and its affairs are of interest to general public.

The discussions and illustrations of the study will be centered on  the financial statement presented to shareholders and also available for potential investors, bond holders and trade creditors as a tool of information for investment decision.

Financial statement based on result on past activities are analyzed and interpreted as  a  basis for predicting future rate of returns and assessment of risk.

Financial statement provides important information for a wide variety of decision, investors draw information from the statement of the firm in whose security they contemplate investing.

Decision makers who contemplate acquiring total or partial ownership of an enterprise expect to secure returns on their investment such as dividends and increase in  the value of their investment [capital gain].

REFERENCES

Adebiyi, K. A. et al. (2006). ICAN Study Pack Financial Accounting. Nigeria; V.1 Publishing Ltd.

Akinsoyime, A. B. (1990). The Objective of Accounting in a Dynamic Society Seminar NCAI Jos.

Black, J. (1990). Some Financial Analysis Techniques ACCA Student Newsletter. Chukwuemeka, E. O. (2002). Research Methods and Thesis Writing: A Multi-Disciplinary

Approach. Nigeria; HRV Publisher.

Drury, C. (2004). Management and Cost Accounting. 6th edition. Singapore; Seng Lec Press. Ezeamama, M. C. (2005). Fundamentals of Financial Management. Enugu; Erna Press Ltd. Gautarn, U. S. (2005). Accountancy. New Delhi; Vrinda Publications.

Heinz, W. and Harold, K. (2005). Management: A Global Perspective. 11th edition, New Delhi; Tata McGraw-Hill Publishing Company Ltd.

Jenfa B. L. (2000). Study Notes on Professional Seminar NCA Jos.