FINANCIAL ACCOUNTING RATIOS AS TOOLS FOR THE EVALUATION OF MANAGEMENT PERFORMANCE (A CASE STUDY OF NESTLE FOOD NIGERIA PLC)
ATTENTION:
BEFORE YOU READ THE CHAPTER ONE OF THE PROJECT TOPIC BELOW,
PLEASE READ THE INFORMATION BELOW.THANK YOU!
INFORMATION:
YOU CAN GET THE COMPLETE PROJECT OF THE TOPIC BELOW. THE FULL
PROJECT COSTS N5,000 ONLY. THE FULL INFORMATION ON HOW TO PAY AND GET THE
COMPLETE PROJECT IS AT THE BOTTOM OF THIS PAGE. OR YOU CAN CALL: 08068231953,
08168759420
FINANCIAL ACCOUNTING RATIOS AS TOOLS
FOR THE EVALUATION OF MANAGEMENT PERFORMANCE (A CASE STUDY OF NESTLE FOOD
NIGERIA PLC)
ABSTRACT
This
research work was motivated by the need to unveil the task encountered by most
uninformed and literate indigene and other African investors in various firms
of their choices.
The
research work listed 30 respondents from the Nestle Food Nigeria Plc coupled
with its stakeholders. The annual
accounts and reports of five years, which span from 2000-2004 was used.
The
research instrument employed in eliciting response from respondents is the
personal inter view method.
This
research work was able to make the following findings.
The
capital structure of Nestle Food Nigeria Plc is devoid of preference share,
which attract a fixed rate of dividend.
The
firm continuously reviews its performance and set improved target that will
ensure survival of the business in the interest f all the stakeholders.
It
also recommend that Nestle Food Nigeria Plc should Endeavour to disclose
certain vital investors financial statistics such as the market price per share
of its highly sought after shares in the Nigerian Stock Exchange floor.
TABLE
OF CONTENTS
Title
page
i
Certification
ii
Dedication iii
Acknowledgments
iv
Abstract
v
CHAPTER
ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Financial
accounting informal ion contained in financial statement of business entities,
is the bedrock for the computation of accounting ratios of business concern.
This in turns form the: basic for the evaluation of both present and past
business (operational) 1) Performances by users of financial information, which
are also referred to as the stakeholders.
It
is worthy of note to ascert that the information contained in financial
statement are well organized m such a way that will enable its users to draw
reasonable conclusion with respect to the financial position and performance
(past, present and future) of the reportingentity. Ratio is one of the
financial analytical tools used in assessing quantitative event (past, present
and anticipated future financial position.
Financial
accounting ratios to a proportion of fraction or percentage expressing the
relationship between one iii a set of’ financial statement and another items in
the same financial statement of the tools used in the analysis and
interpretation of financial statement such as the cash flow statement and
accounting ratios, the later has been proved to be the most powerful tool.
1.2 STATEMENT OF THE PROBLEM
Although,
financial ratios analysis is the most powerful tool used in analyzing (lie
financial and operating performances of firms, the technique suffer from some
bottle necks which are also inherent in financial statement prepared and
presented to the public.
A
major draw back derived from the fact that facts and figuresmostly computed
from historical accounts also suffer from same limitations which historical
account have. For instance
i. Financial ratio analysis drawn from
historical information is of little use in assessing the future prospects of a
firm.
ii. Financial ratios are quantifiable
information like the change in personnel level over-time.
iii. Some financial ratios are not universally
accepted as uniform parameter far financial analysis, such as the Return on
capital employed (ROCE)
Closely
allied to this is the fact that the figured of financial statement are not
adjusted far changes in the price level, thus heady to unhealthy financial
evaluation.
1.3 RESEARCH QUESTIONS
The
following are research formulated in assessing the financial health of Nestle
Food Nigeria Plc.
i. To what extent have the firm been
operating profitability in terms of its profit margin and assets utilization?
ii. Is the firm consistent in theuseof
its accounting policies?.
iii. Can the firm sustain or improve its
profitability and operating Performance given the strategic competitive
advantages inthe industry?
iv. Is the ratio of slow moving stock high
in the current asset mix?
v. How frequently and efficiently do,
the firms convert its current asset into currentliabilities?
vi. To what extent has the firm been able
to efficiently managed its working capital?.
vii. How efficiently has the firm been able
to convert its current asset into liquid cash?
1.4 RESEARCH HYPOTHESES
The
research work is aim at finding answer tocertain hypothesis that arecentral to
the research work. These hypothesesinclude:
1. HO:
Ratio analysis assists in evaluating and measuring both operating and
financial performances of management.
HA:
Financial ration analysis does not assist in assessing and
measuring
both operating and financial performances of
management.
2. HO: The result of a well conducted
financial ratios can be usedbasis for forecasting future performances and
efficiencyof management.
HA:
The result of a well conducted financial ratio analysis can be used as a basis
for forecasting future performances and efficiency of management.
3. HO: Financial ratio analysis is used as a
basis for decision making by stakeholders
HA:
Financial ratio analysis is not used for decision-making by shareholders.
1.5 PURPOSE OF THE STUDY
This
research work is design primarily to justify and place more premiums on the use
of financial ratios as veritable tools. For evaluation and measuring the
performances and efficiencyof management.
The
prime purpose of the study is to analyze by way of financial ratio, the financial
statement of Nestle Food Nigeria Plc in order to determine.
i. Theefficiency of the firm in the
use of its assets
ii. The profitability and productivity of
the firm
iii. Whether the firm is capable of meeting
its current financial obligation as at when due.
iv. The source of long-term funds employed
by the firm.
v. Whether the firm is measuring up in
terms of the average industry ratio established.
vi. How technique of financial ratio can
be effectively employed by
shareholder
and stakeholders in analyzing the performance of the firm (s) of their choice.
1.6 SCOPE OF THESTUDY
It
is discovered that most personnel of the firm, especially the top level
managers areunwilling to provide required information relating to the study
especially the average industry ratios. Hence most average industry ratios used
in the study are based on past experience within the industry. Also, the accounting
ratio under consideration is limited to a period of five years. From 2000
through year 2004.
1.7 SIGNIFICANCE OF THE STUDY
The
prime objective of this study are:
i. To investigate the extent at which
financial statement serve as a bedrock for financial analysis vis-Ã -vis
financial ratios.
ii. To critically analyze the
performances and position of the firm within its industry, using the accounting
information conveyed by its financial statements and annual reports in previous
years.
iii. To verify whether the financial
statementhave been prepared and presented in compliance with statement of
accounting standards and other professional internal ional accounting standard.
iv. To ascertain whether the firm in
question is as a going concern can meet and face future challenges and demands
of both legal and social responsibilities.
1.8 LIMITATIONS OF THESTUDY
Ø
Basically the research works is limited to the information purveyed by the
financial statements of Nestle Food Nigeria Plc.
Ø
The study is also limited by the responses provided by the respondent via the
personal interview aimed at sampling requisite information relevant to the
study.
Ø
Above all the study is limited by the average industry ratio which is not
provided in the annual report and account of the firms.
Ø
Other imitation of the study conic in farm of the accounting policies,
practices, basic and methods employed in the preparation and presentation of
the financial statement upon which financial analysis have been based.
1.9 DEFINITION OFTERMS
i. FINANCIAL ACCOUNTING RATIO:This
refers to the proportion of fraction or percentage, which expresses the
relationship between one item of account and another in the same financial
statements.
ii. FINANCIAL ANALYSIS: This refers to
the assessment of past, present and anticipated future event of the financial
position and conditions armed at identifying any weakness or strength in the
performance of the firm evaluated.
iii. REPORTING ENTITY: This is an accounting
terminology employed specifically to refer to the company which its financial
statement is being analyzed by way of financial ratios.
iv. FINANCIAL INFORMATION: This refers to
those piecesof in formation contained in the financial statement of the firm
being assessed.
v. HISTORICAL ACCOUNT: This refers to
the financial statement which has been prepared and presented in accordance with
historical cost concept, which holds thatcostis the appropriate basis for
initial accountingrecognition of all assets acquired, services rendered or
received and expenses incurred.
vi. FINANCIAL APPRAISAL: This is the
assessment or evaluation of the operating financial performance of the
management of company overtime via the use of financial ratios.
1.10
HISTORICAL BACKGROUND OF THE CASE STUDY
Nestlé
Company had started off from a single man's idea, and developed into a giant
corporation. In 1866 Henri Nestlé, a pharmacist, developed a milk food formula
for infants who were unable to tolerate their mother milk (Nestle.com). His
product became a success, and it created a demand throughout Europe. As
Nestlé’s popularity grew more businesses wanted to merge and become partners
with Henri Nestlé's business. From 1866 to 1947 the Nestlé Company had gone
through several name changes. In 1905, Anglo-Swiss Condensed Milk Co. and
Farine Lactee Henri Nestlé merged, and the company’s name became Nestlé & Anglo-Swiss
Condensed Milk Co. Then in 1929, Peter-Cailler-Kohler Chocolats Suisses S.A.
merged with the company. The name was then changed to Nestlé & Anglo-Swiss
Holding Co. Ltd, on November 27, 1936. In December 1947, Co. acquired all the
shares capital of the Alimentana S.A. company in exchange for fifteen Nestlé
shares and fifteen Unilac shares for each of Alimentana S.A. share, so this
point the name was at Nestlé Alimentana S.A. And then finally, the last name
change that the company would endure was in 1977, where it adopted the name
Nestlé SA (Mergent Online). Along the way Nestlé’s company remain successful,
which allowed them expand to new region and territories throughout the world,
making them the world’s biggest food and beverage company. Nestlé’s
headquarters are located in Vevey, Switzerland, but the Nestlé Company has
factories or operation in almost ever country in the world. Since the Nestlé
case was published in 1998, it stated that Nestlé had employed 230,000 people
worldwide, with $71.7 billion in sales (Rodgers, 2000). Now moving forward to
2003, Nestlé has increased the amount of employees to 253,000 people, with $88
billion in sales (Nestle.com). Nestlé is increasing the size of their company
year by year. In addition, to the increase in the size of the Nestlé Company;
Nestlé also has increased the variety in the different products they offer. In
Nestlé’s business strategy they encourage product growth through innovation and
renovation (Nestle.com). This strategy has allowed Nestlé to develop many
different products in the various fields: baby foods, dairy products, breakfast
cereals, ice creams, chocolates and confectionery, prepared foods, beverages,
food services, bottled water, and pet care. This brings us to the main focus of
our case analysis, the dairy division, and the yogurt product LC1 that lies
within that division.
Nestlé
strives on being innovator and renovators. So their research team in
Switzerland discovered a culture called Lactobacillus acidophilus, or La-1.
This particular product was chosen because it contains a probiotic agent, which
is living microbial feeding supplements that allow the lower intestine to
function better (Rodgers, 2000). La-1 helps the small intestine function by
improving the body’s immune system, and in turn helping the body in preventing
diseases. Nestlé has now found a solution for their health conscious consumers,
but now they need to find away to implement it into one of their products. That
when the researchers at Nestlé discovered that if they replace one of the mixes
in their yogurt with the La-1 the same texture would be maintained. Now with
the combination of Nestlé yogurt mix and the La-1; Nestlé has given their
yogurt the name of LC1
Nestlé
describes itself as a food, nutrition, health, and wellness company. Recently
they created Nestlé Nutrition, a global business organization designed to
strengthen the focus on their core nutrition business. They believe
strengthening their leadership in this market is the key element of their
corporate strategy. This market is characterized as one in which the consumer’s
primary motivation for a purchase is the claims made by the product based on
nutritional content.
In
order to reinforce their competitive advantage in this area, Nestlé created
Nestlé Nutrition as an autonomous global business unit within the organization,
and charged it with the operational and profit and loss responsibility for the
claim-based business of Infant Nutrition, HealthCare Nutrition, and Performance
Nutrition. This unit aims to deliver superior business performance by offering
consumers trusted, science based nutrition products and services.
The
Corporate Wellness Unit was designed to integrate nutritional value-added in
their food and beverage businesses. This unit will drive the nutrition, health
and wellness organization across all their food and beverage businesses. It
encompasses a major communication effort, both internally and externally, and
strives to closely align Nestlé’s scientific and R&D expertise with
consumer benefits. This unit is responsible for coordinating horizontal,
cross-business projects that address current customer concerns as well as
anticipating future consumer trends.
Nestlé
is a global organization. Knowing this, it is not surprising that international
strategy is at the heart of their competitive focus. Nestlé’s competitive
strategies are associated mainly with foreign direct investment in dairy and
other food businesses. Nestlé aims to balance sales between low risk but low
growth countries of the developed world and high risk and potentially high
growth markets of Africa and Latin America. Nestlé recognizes the profitability
possibilities in these high-risk countries, but pledges not to take unnecessary
risks for the sake of growth. This process of hedging keeps growth steady and
shareholders happy.
HOW TO GET THE FULL PROJECT WORK
PLEASE, print the following instructions and information if you
will like to order/buy our complete written material(s).
HOW TO RECEIVE PROJECT MATERIAL(S)
After paying the appropriate amount (#5,000) into our bank Account
below, send the following information to
08068231953 or 08168759420
(1) Your project topics
(2) Email Address
(3) Payment Name
(4) Teller Number
We will send your material(s) after we receive bank alert
BANK ACCOUNTS
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 0046579864
Bank: GTBank.
OR
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 2023350498
Bank: UBA.
FOR MORE INFORMATION, CALL:
08068231953 or 08168759420
AFFILIATE LINKS:
myeasyproject.com.ng
easyprojectmaterials.com
easyprojectmaterials.net.ng
easyprojectsmaterials.net.ng
easyprojectsmaterial.net.ng
easyprojectmaterial.net.ng
projectmaterials.com.ng
googleprojectsng.blogspot.com
myprojectsng.blogspot.com.ng
https://projectmaterialsng.blogspot.com.ng/
Comments
Post a Comment