FINANCIAL ANALYSIS AS A TOOL OF STRATEGIC PLANNING IN BUSINESS ORGANISATION

By

UGWU CHARITY EBERE

Presented To

Department of Accountancy

TABLE OF CONTENTS

TITLE PAGE II

APPROVAL PAGE III

CERTIFICATION IV

ACKNOLEGDEMENT V

TABLE OF CONTENTS VII

CHAPTER ONE

0.0 INTRODUCTION 1

1.1 BACK GROUND OF THE STUDY 1

1.2 STATEMENT OF THE PROBLEM 4

1.3 PURPOSE OF THE STUDY 5

CHAPTER TWO

2.0 LITERATURE REVIEW 7

2.1 OBJECTIVE AND USES OF

FINANCIAL ANALYSIS 8

2.2 RATIO ANALYSIS TECHNIQUES 9

2.3 STRATEGIC PLANNING 13

CHAPTER THREE

3.0 SUMMARY OF FINDINGS, CONCLUSION OF RECOMMENDATION 19

3.1 SUMMARY OF FINDINGS 19

3.2 RECOMMENDATION 20

CHAPTER ONE

BACKGROUND OF THE STUDY

Change and organizational implication of change are very much in minds of modern/managers. And managers as become increasingly aware of the need and for a better information technique and process to cope with risk and uncertainties that are the future of change. management assignments of the likely, impact of constantly concurring economic social and technological change necessitate the need to carryout vigorous process of anticipating change, plotting it course and shaping the change for intended organization purpose, this is done through designing of strategies and plans to cope with aid of strategies and plans to cope with the problem and opportunities obtained from proper analysis of financial data.

Financial analysis involves the use of financial statement such as balance sheet, which gives a numerical view of the assets and liabilities of a firm at a particular time and income statement well known as profit and loss of the firm for particular period.

Financial analysis is the process of identifying the financial strengths and weakness of a firm as property confirming relationship between items of the balance sheet and profit and loss.[PANDEY 1979].

Financial statement are also the instrument of a business enterprises, it constitute a report on a management performance affecting to managerial success or failure and indicating warning signal of impending difficulties. To interpret data appearing in financial statement. One most understand the inner working of the accounting system and significance of various relationship.

The analysis and interpretation of financial statement endeavor to provide information in respect to organization to which the respect are prepared this analysis can be undertaken to aid management decision making process and planning [viscous 1987] page 1.

Apart from the management who make the use of financial statement interpretation and analysis, it may also be at a great interest to others to other user of financial statement in the society this group can be classified as internal users and external users. They are: -

a. Share holders [owners of company]

b. Financial institutions

c. Creditors

d. Investors

e. Financial analysis

f. Government [for tax purpose by inland revenue department].

g. Financial journalist [ harns and hazard 1994].

More so each party concerned have divergent reasons for their interest in financial statement analysis and it must follow a given principles and rules of the accounting standards. This will allow a full appreciation of facts revealed by the accounts

Analysis and interpretation of financial statement of the an organization can be carried out through the use of.

h. Ratio analysis.

b. Financial statement

Ratio analysis is at of the tools used when making financial analysis, they are yardsticks to evaluate the firms' financial condition and performance and it deals with relating two financial data to each other.

Ratio are used to greater extent by the higher cadre of management who are responsible for maximizing profit and making strategic plan for the survival and growth of the company, it may be use to assets the efficiency of the management and in achievement of either organization within the same industry.

Fund flow statement is also used in analyzing the performance of the business organization by comparing the balance sheet as two different data and to relate change that occur in the financial structure to profit and loss made in the period under consideration.

This is useful in making strategies plans because of the information revealed about the business organization activities and policy's

STATEMENT OF PROBLEM.

This research work tends to highlight the use of financial analysis as a tool in strategy planning in order to measure the growth and profitability of the company.

Modern industries have cut grown the area of guesswork to survive today, a business must known it's progress and catrogress at all points in time. Apart from this, "the management of every business must keep foremost in its thinking two primary objectives to earn a profit and to study solvent, that is to have in land sufficient cash to pay as they fail due[merge 1981].

The need for financial analysis is for identifying the financial is strength and weakness of a firm as a property confirming relationship between items of the balance sheet and profit and loss [PADEY 1979]

For the purpose of this study the economic entity that will be concentrated upon is the premier breweries limited onitsha in Anambra state.

PURPOSE OF THE STUDY

1 To find out the extent financial analysis can be useful to management in its strategic planning and controlling process.

2 To find out the significance of financial analysis in assessing financial strengths and weakness of a firm.

3 To identify how the ways and methods of financial analysis helps a firm.

4 To find out how financial analysis can give a valuable insight into financial activities of a firm.

RESEACH QUESTIONS

1 To what extent can financial analysis be useful to management in its strategic planning and controlling process?.

2 What role do financial analysis play in assessing financial analysis gives a valuable insight into financial activities of a firm .