ROLE OF FINANCIAL STATEMENTS IN INVESTMENT-DECISIONS
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ROLE OF FINANCIAL STATEMENTS IN INVESTMENT-DECISIONS
Abstract
This study’s research topic is “The role of financial statements in investment decisions” – a study of selected banks in the Enugu metropolis. The goal is to determine the relationship between financial statements and investment decisions,
as well as the impact of financial statements on investment decision making, and to determine whether investment decisions are entirely based on financial statements. The study population consists of 125 employees from the five major selected banks.
The sample size obtained using the Yaro Yamani formula was (95). The hypotheses were examined using the Z test, a statistical procedure with a 5% level of significance.
The researcher also used primary data gathering methods such as surveys and personal interviews. Secondary data collection methods include library research of relevant materials and existing documents from the selected banks.
The researcher suggests that banks in Enugu metropolis examine financial statements before making investment decisions, and that all parties interested in financial statements apply required financial ratio analysis for decision making.
CHAPTER ONE INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Profit and loss statements are prepared by every business. Account or income statement to determine the net result of the business’s financial operations, whether it generated some revenue or profit or suffered a loss.
It also prepares balance sheets to determine the financial position of the company. Financial statements include a profit and loss account or income statement, a retained earnings statement, and a balance sheet.
According to Gautam (2005), a financial statement is financial information that is information about a company’s financial status when given in a brief and compact manner. Aside from the profit and loss account and balance sheet, other statements are created to draw specific conclusions.
To determine the changes in working capital, a two-year schedule of current assets and current liabilities might be constructed. Similarly, a fund flow statement and cash flow statement can be constructed to anticipate future cash receipt and payment.
As a result, financial statements contain the profit and loss account, income statement, and balance sheet, as well as many schedules and statements.
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