CHAPTER ONE
1.1 INTRODUCTION
The Term “Ratio Analysis” could be described as the analysis of financial statement in order to judge the performance of the COMPANY or group of companies.
The “Investment Decision” Means the allocation of funds to invest proposal whose benefits are to be realized in the future.
The combination of the two terms described above or the relationship between them is basically the purpose of this work. That is the impact of ratio analysis as a tool for investment Decision. The three fundamental statement requires are the income statement, the balance sheet, and the statement of changes in financial position. The analysis of these statement combined with the preparation and analysis of related financial statement are required to as financial statement analysis.
To make rational decision in keeping with the objective of a firm, the financial management his certain analytical tools. The company itself and suppliers of capital, creditor and investor all undertake financial analysis. The form’s purpose is not only internal control but also better understanding of what capital supplier seek in financial condition and performance from it. To evaluate, the financial analyst needs certain Yardsticks frequently used in ratio or index relating two pieces of financial data each other. For instance, the relationship between gross profit and sales is expressed by the accounting ratio know as gross profit % or gross margin, which is computed as follows.
GROSS PROFIT % = Cross Profit x 100 = x%
Sales 1
1.2 HISTORY OF THE ORGANIZATION
The company was incorporated in Nigeria as P.B. Nicholas and Company Limited on 04 December 1948 with an authorized share capital of å40.000 divided into 40,000 ordinary share of å1 each. The name of the company was changed to Alagbon Industries Limited in 1953 and to Associated Industries Limited in 1960. The company became a public limited liability company and had its shares subdivided into ordinary share of 50 kobo each on 19 July 1972, following which its shares quoted on the Exchange in the same year. The company’s current name was adopted on 22 November 1990 as PZ.
The principal activities of the group are the manufacturing and sales of wide range of consume products and home appliance. Their products include detergent soap, pharmaceuticals cosmetics, confectionaries, refrigerators, freezen, Airconditioners, plastic container and components. The activities which claims about 85 – 90% of Merchandising.
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