The Role of Accounting Ratio Analysis in Measuring Financial Performance of a Firm a Case of Mukwano Group of Companies

TABLE OF CONTENTS

DECLARATION

APPROVAL ii

DEDICATION iii

ACKNOWLEDGEMENT iv

TABLE OF CONTENTS v

LIST OF ACRONYMS viii

LIST OF FIGURES ix

LIST OF TABLES x

ABSTRACT xi

CHAPTER ONE

INTRODUCTION OF THE STUDY

1.0 Introduction I

1.1 Background of the study

1.2 Statement of the Problem 2

1.3 Purpose of the study 3

1.4 Objectives of the Study 3

1.4.1 General Objective 3

1.4.2 Specific objectives 3

1.5 Research questions 3

1.6 Scope of the study 4

1.6.1 Geographical scope 4

1.6.2 Time scope 4

1.6.3 Content scope 4

1.7 Significance of the Study 4

1.8 Conceptual framework 5

CHAPTER TWO 6

LITERATURE REVIEW 6

2.Olntroduction 6

2.1 Review of the key concepts 6

2.1.1 Financial ratio 6

2.1.2 Financial Performance 6

2.2 Forms of ratio used by organizations 6

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2.2.1 Cash flow ratios .6

2.2.2 Leverage (debit) Financial Ratios 7

2.2.3 Liquidity (solvency) Financial Ratios 7

2.2.4 Financial Operation Ratios (Asset Efficiency) ratios 7

2.2.5 Profitability Financial Ratios 8

2.2.6 Valuation ratios (market value ratios) 8

2.3 Role of accounting ratio analysis in measuring financial performance of organizations 8

2.4 Limitations of ratio analysis in measuring performance of organizations 10

2.5 Conclusion 12

CHAPTER THREE 13

METHODOLOGY 13

3.1 Introduction 13

3.2Research design 13

3.3Study population 13

3.4Sample size 13

3.5Sampling Techniques and Procedures 14

3.5.1 Simple Random Sampling 14

3.5.2Purposive Sampling 14

3.6 Data collection methods 14

3.6.1 Primary data 15

3.6.2Secondary Data 15

3.7Data collection instruments 15

3.7.1 Self-Administered Questionnaires 15

3.8Validity and Reliability 15

3.8.1 Validity 15

3.8.2 Reliability 15

3.9 Data Collection Procedures 16

3.loDataAnalysis 16

3.11 Ethical Considerations 16

CHAPTER FOUR 17

PRESENTATION OF RESULTS! FINIMNGS 17

4.1 Introduction 17

4.2 General Findings 17

4.3 Questionnaires Distributed and Returned 17

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4.4 Presentation of the findings according to the objectives 20

4.5 To find out the role of accounting ratio analysis in measuring financial performance of

Mukwano Group of Companies 23

4.6 To find out whether there are limitations of ratio analysis in measuring Performance of

Mukwano Group of Companies Limited 24

CHAPTER FIVE 25

CONCLUSIONS AND RECOMMENDATIONS 25

5.1 Introduction 25

5.2 Conclusion 25

5.3 Recommendations 26

5.3.1 Forms of ratio used by Mukwano to measure performance 26

5.3.2 Role of accounting ratio analysis in measuring financial performance 26

5.3.3 Limitations of ratio analysis in measuring performance 26

5.4 Areas for further research 27

REFERENCES 28

APPEN]MXI 31

QUESTIONNAIRE SCHEDULE 31

APPENDIX II 34

Sample Size for the Given Population Sizes 34