ANALYSIS OF FINANICAL STATEMENTS AS AN AID TO MEANINGFUL INVEST DECISION MAKING (A CASE STUDY OF INVESTMENT FIRMS IN ENUGU STATE)

ABSTRACT

          The purpose of this research project was to find out how financial statement analysis service of our aid to meaning decision by investment firms in Enugu state.  Financial statement analysis are used by investment firms to make their investment decisions.  They are also used by management to make their decisions.  Some of the ratio commonly computed by investment firms are profitability ratios, liquidity ratios.  Market value ratios leverage ratios and ordinary share ratios.

            This research project was embarked on because most investment firms do not implement meaningful decision that will enhance their meaningful opportunities.  Moreover, most investment firms do not study investment opportunities as to understand the risk associated with investment proposals as to make meaningful decision based on that before investing their resources.

            The methodology used in this work include subheadings like research decision, sampling procedure, data collection and method of data analysis as well as statistical tool of analysis.

            The method of research design that was adopted in this study is the sample survey through the administering of questionnaire to investment firms.  I was discovered that making investment decisions using financial statements analysis would very significantly with the profitability of the investment firms.

            This is so because using chi-square to test our hypothesis.  We discovered that the tabular value of 3.841 is less than our calculated value of 7.815.

            We equally accepted the second test in the alternative hypothesis which stats that “there is significant relationship between decision computing with chi-square (X2) we had 3.841 while the tabular value is 3.841.

            Thirdly, we also accept our alternative hypothesis in our third hypothesis which states that “There is significant relationship between investment decision and investment profitability because from calculated X2 we had 9.483 in the tabular value.

            Lastly, we made recommendations to both investors and management in investment firms on how best to utilize financial ratios in making meaningful investment decisions.