Role of financial statement in investment decision making. (a case study of first bank of nigerian plc)

Thesis Overview

<p> 1.0 INTRODUCTION<br>Corporate organizations owe a duty to fully disclose matters<br>concerning their operations so as to aid investors in making investment<br>decisions. Both large and small organizations in addition to satisfying<br>the legislating requirement tend to retain existing investors and to<br>attract potential ones through the publication of their financial<br>statements where the capital stock of a corporation is widely held and<br>its affairs are of interest to general public relations. The discussions and<br>illustrations of the study will be centered on the financial statement<br>presented to shareholders and also available for potential investors,<br>bond holders and trade creditors as a tool of information for<br>investment decision. Financial statement based on result on past<br>activities are analyzed and interpreted as a basis for predicting future<br>rate of returns and assessment of risk.<br>Financial statement provides important information for a wide<br>variety of decision, investors draw information from the statement of<br>the firm in whose security they contemplate investing. Decision makers<br>who contemplate acquiring total or partial ownership of an enterprise<br>expect to secure returns on their investment such as dividends and<br>increase in the value of their investment [capital gain]. Both dividends<br>and increase in the value of shares of company depends on the future<br>profitability of the enterprise. So investors are interested in future<br>profitability. Past income dividend data are used to forecast returns<br>from dividend and increase in share prices.<br>1.1 HISTORICAL BACKGROUND<br>For the purpose of this research, first bank plc. Anyigba branch<br>kogi state is selected as a case study for academic purpose<br>According to google.com [electronic library] first bank of Nigerian<br>Plc. was established in 1894 as the first bank in Nigeria, a premier in<br>West African and the leading financial service solution provider in<br>Nigeria. From being the only bank for decades, weathered the banking<br>exposure of the 1930,s to 1950s followed by the era of government<br>ownership and control to a flurry consolidations and then gradual<br>growth in number banks up to the early 1980s, then yet another<br>industry growth spurt in early 1990s when the banking sector was<br>deregulated, leading to an industry shake-up in the late 1990s, which<br>reduced the number of banks from 126 to 77. At later resuscitation and<br>growth to 89 banks leading al through the seasons, first bank plc has<br>remained resilient dependably dynamic and truly the first.<br>Based on the researchers’ oral interview with the bank officials,<br>the Anyigba branch of first bank plc. was established in the then kwara<br>state in the 1978. They render other services than safe keeping of<br>money like giving loan to their customers and hire purchase. The<br>branch presently has about 288 customers.<br>1.2 STATEMENT OF THE PROBLEM<br>It is observed that the role of financial statements in investment<br>decision making in Nigeria has some problems to both investors and<br>managers of business organizations who are either not aware of the<br>importance of interdependence relationship that exist between<br>investors and business organizations. Such problems include;<br>i. How analytical tools are set to aid prospective investors in<br>accessing the financial position of the corporate organization.<br>ii. Evaluation of performance of a company in investment decision<br>making.<br>iii. How to determine the profitability of a company.<br>The above listed problems are the problems to look into in this<br>research work. The problems analyzed tend to scare away both existing<br>and potential investors. The reason of this study is to adequately look<br>into the above problems and suggest possible solution to any of them.<br>Nevertheless this research will find possible key factors to solving these<br>problems because financial statement in investment decision making in<br>Nigeria is the life blood of every organization to the potential investor. <br></p>