The Impact Of Ratio Analysis on Management Decision Making in an Organisation (A Case Study of Zenith Bank Plc, Ilorin Branch)

TABLE OF CONTENT

Title Page                                                                                                        

Certification                                                                                                              i  

Dedication                                                                                                                 ii

Acknowledgement                                                                                                    iii

Table of Content                                                                                                       v

CHAPTER ONE

1.1      BACKGROUND OF THE STUDY                                                                     1

1.2      STATEMENT OF THE PROBLEM                                                                    4

1.3      OBJECTIVE OF THE STUDY                                                                           5

1.4      RESEARCH QUESTION                                                                                   6

1.5      SIGNIFICANCE OF THE STUDY                                                                     7

1.6      SCOPE OF THE STUDY                                                                                   8

1.7      LIMITATION OF THE STUDY                                                                         9

1.8      DEFINITION OF TERMS                                                                                  9

CHAPTER TWO

LITERATURE REVIEW

2.1      PREVIEW                                                                                                       12

2.2      CONCEPTUAL FRAMEWORK OF RATIO ANALYSIS                                  12

2.3      APPROACHES TO USE OF RATIOS                                                              14

2.4      CLASSIFICATION OR TYPES OF RATIOS                                                    15

2.5      PLACE OF RATIO ANALYSIS IN AN ORGANIZATION  

           OR FINANCIAL INSTITUTION                                                                      22

2.6      EXPECTED ROLE OF MANAGERS IN RATION TO

           RATIO ANALYSIS                                                                                         23

2.7      CONTRIBUTIONS OF INVESTORS TO

           ADMINISTRATIVE PERFORMANCE IN TERMS

           OF FINANCIAL RATIO ANALYSIS                                                               24

2.8        CONTRIBUTION OF RATIO ANALYSIS IN

           DECISION MAKING IN AN ORGANIZATION                                              25

CHAPTER THREE

3.0      RESEARH METHODLOGY                                                                            30

3.1      PREAMBLE                                                                                                    30

3.2      POPULATION SIZE                                                                                        30

3.2      SOURCE OF DATA                                                                                        31

3.3.1   PRIMARY SOURCE                                                                                       31

3.3.2   SECONDARY SOURCE                                                                                  31

3.4      RESEARCH INSTRUMENT                                                                            33

3.5      DATA ANALYSIS PROCEDURE                                           35                           

CHAPTER FOUR

4.0      DATA PRESENTATION ANALYSIS AND INTERPRETATION 36                    

4.1      INTRODUTION                                                                                              36

4.2      DATA PRESENTATION AND ANALYSIS                                                     37

4.3       COMPUTATION OF SOME SELECTED RATIO USING

           THE ZENITH BANK STATEMENT OF ACCOUNT AS

           BELOW BALANCE SHEET AS AT DISMEMBERS 31st

           2011                                                                                                              43

4.4      SUMMARY OF FINDINGS                                                                             49

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

5.1      SUMMARY                                                                                                    51

5.2      CONCLUSION                                                                                                52

5.3      RECOMMENDATION                                                                                    52

CHAPTER ONE

1.1      BACKGROUND OF THE STUDY

           In every organizing irrespective of its size, ownership, structure, impact of ration analysis on management decision making occupy a  crucial position.

           However, given this centrality, it can be said that behind every successful organization, the process in which the management arrive at decision making is very important as far as financial management is concerned in the private sector of the economy and especially in a banking institution like ZENITH BANK.

In a nutshell, the impact of ration analysis on management decision making which is the most preoccupation of this research work is referred to the manner through which the management of organization takes decision suitable for profit as possible, future planning, controlling current performance and future development through liquidity analysis, leverage analysis and activity analysis.

Significance change has taken place in recent years in the size and complexity of both private organization and public organization because of this management is faced with evaluation in technical, social political and economic forces. As a result, the methods of arriving at the decision as become more difficult to management especially in accounting activity of the organization.

This research is devoted to examination of some major impact of ratio analysis in financial institution (ZENITH BANK OF AFRICAN).

Zenith Bank was established in May, 1990. It became a Public Limited Company in July, 2004, and had an initial public offering on the Nigerian Stock Exchange (NSE) on October, 21 of that year. Also in 2004, credit rating agency fetch ratings identified its credit as AA on their long-term scale. The Bank has been in a series of controversies regarding its labour practices. The bank developed a penchant for mass terminations of staff employment without regard to due process. A series of court cases instigated against the bank by ex-employees adds credence to this view. In 2010, the Bank was defrauded of about N7.5Billion by a staff and was made to make provisions for it by Nigeria’s Reserve Bank.