EFFECTS OF PERFORMANCE EVALUATION THROUGH THE ANALYSIS OF FINANCIAL STATEMENT ON INVESTMENT DECISIONS (A CASE STUDY OF LOGMAN NIGERIA PLC.)

ABSTRACT

This study examined the effects of performance evaluation through the analysis of financial statement on investment decision, using Longman Nigeria Plc as the case study. Based on the set objectives of the study, structured questionnaire consisting of eighteen (18) close-ended questions and one (1) open-­ended questions were developed and administered on one hundred (100) respondents of the aforementioned company, but a total of ninety-four (94) questionnaires were completely filled and returned. Hence, the study employed primary and secondary data (i.e. questionnaire method, interview method, and data sourced from established publications). Data collected were analysed with the aid of chi-square statistical technique. Findings from the study shows that Performance Evaluation should be in line with achieving Corporate Objectives and moreover, analyses of financial analysis has helped in identifying the weakness in company’s operation. The study recommended that management should ensure that performance evaluation in line with corporate objectives.

TABLE OF CONTENTS

CHAPTER ONE INTRODUCTION

1.1      Background to the Study

1.2      History of the company                          

1.3      Statement of the Problem                                              

1.4      Objectives of the Study               

1.5      Research Questions                                                          

1.6      Research Hypothesis                                                                    

1.7      Significance of study                                                        

1.8      Scope and Limitation of the Study

1.9      Methodology                                             

1.10   Limitations of the Research Method                                        

1.11   Definition of Terms                                   

References

CHAPTER TWO: LITERATURE REVIEW

2.1      Introduction                                                           

2.2      Effectiveness and Efficiency

2.3      Objectives of Performance Evaluation                       

2.4      Inter-Firm Evaluation

2.5      Inter-Temporal Evaluation                     

2.6      Industrial Average Evaluation                           

2.7      Other Aspects of Performance Evaluation                

2.8      The Financial Statements                                                

2.9      Financial Statement Analysis                             

2.10   Ratio Analysis                                                         

2.11 Alternative means of Analysis Financial Statements 

2.12   Summary                                                                 

References                          

CHAPTER THREE: RESEARCH METHODOLOGY

3.1      Introduction                                                                       

3.2      Research Design                            

3.3      The Study Area      

3.4      The Study population

3.5      Sample and Sampling Technique          

3.6      Research Instrument                                                        

3.7      Pilot Study: Validity and Reliability                   

3.8      Method of Data Analysis                         

3.9      Reason for using Chi-square method  

CHAPTER FOUR: DATA ANALYSIS AND INTERPRETATION

4.1      Background Information                                                

4.2      Research Question                                                     

4.3      Test of Hypothesis                                    

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1      Summary                                                                 

5.2      Conclusion                          

5.3      Recommendations                                    

5.4      Suggestions for Further Studies                                    

References                                                  

CHAPTER ONE

INTRODUCTION

1.1      BACKGROUND TO THE STUDY

Financial analysis involves the assessment of a firm's past, present and anticipated future financial condition. The objective is to identify any weakness in the firm's financial health that could lead to the future problems and to determine any strength that the fine might capitalize upon.

The need for financial accounting statement is becoming increasingly indispensable. This is due to the increased complexity of the economy and the massive growth of corporate organization.

1.2      HISTORY OF THE COMPANY

Longman Nigeria was incorporated on the 10'' August, 1961 as a subsidiary of Longman group Ltd. A renowned British Publishing Company founded in 1724. Although, Longman, Green and Company, as this company was then known had since 1947 had a representation in Nigeria, it had operated as a mere trading out post of the U.K. parent company concentrating on the importation and distribution of education books produced primarily for the British school system.

A study of the progress of Longman Nigeria Plc. over the past thirty-three years has shown various successful project that have had powerful influence on the direction and development of publishing industry and indeed education in Nigeria. The blue-print of Longman's text development and list building strategies are largely attributable to its crop of pioneer employees.

1.3      STATEMENT OF THE PROBLEM

Extent to which the company is able to influence its overall performance.

i.           Ability to meet its financial obligation in form of dividends to investors.

ii.         Inability to meet debt payment on due dates by having sufficient cash available.

1.4      OBJECTIVES OF THE STUDY

The objective of this study is to:

i.           Assess the performance of organizations (with particular reference to Longman Nig. Plc.), in order to ascertain its level of performance.

ii.         To see to what extent investors' decision are influenced by the analysis of the company's performance.

iii.       Finally interpret and advices where necessary on appropriate actions to take in order to improve the performance of the company.

1.5      RESEARCH QUESTIONS:

Financial ratios give the previous year's performance and average performance in the industry meaningful comparison of a firm's financial data at different points in time and with other firms. It provides the basis for answering some relevant questions concerning the well-being of the firm.

i.     How liquid is the firm?

ii.    Is management generating sufficient profit from the firm's assets?

iii.   How does the firm's management finance its investment?

iv.  Is the common stakeholders recovering sufficient returns on their investment?

1.6      RESEARCH HYPOTHESES

Top executives must know that the effectiveness with which accounting information satisfies the organization's wider goals depends on to relevance, time lines and accuracy and the way it is used by member of the organization.

Ho:     Performance evaluation should be in line with achieving corporate objectives

Hi:       Performance evaluation should not be in line with achieving corporate objectives