FINANCIAL RATIO ANALYSIS AS A TOOL FOR INVESTMENT
DECISION
CHAPTER ONE
INTRODUCTION
According to Pamela Peterson Drake accounting reports contains information that would aid users of such report in their judgment or decision about economic matters. The information is expressed primarily in monetary terms. Reports in the financial statements are considered individually they are generally of limited usefulness. Significantly relationship may not be apparent from a view of absolute naira amount because no indication is given of whether a particular item is good or bad from the firm.In other to appreciate the significant changes and relationships, the naira amount reported in the financial statements are frequently converted into percentages or ratios by the statement users.
Basically, making naira investment decision has been a major cause of business failure for quite sometimes now. This has become more pronounced in recent times due to the present state of the economy characterized by the following: a. General economic depression. b. Deregulation of financial institution rate and subsequent liquidity squeeze and increased costs of borrowing. c. Rapid rate of technological changes with particular reference to computerization and d. Anticipated and general instability of the government of the day