TITLE PAGE

THE IMPACT OF FINANCIAL STATEMENT IN INVESTMENT DECISION.

(A CASE STUDY OF CEMENT COMPANY OF NORTHERN NIGERIA SOKOTO).

BY

SAUDAT YARI ABDULLAHI

(1011902004)

BEING A RESEARCH PROJECT SUBMITTED TO THE DEPARTMENT OF

ACCOUNTING, FACULTY OF MANAGEMENT SCIENCES, USMANU DANFODIYO
UNIVERSITY SOKOTO IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR
THE AWARD OF BACHELOR OF SCIENCE (B.Sc) DEGREE IN ACCOUNTING.

OCTOBER, 2015

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 CERTIFICATION

This project titled “The impact of financial statement investment decision (A Case Study

of Cement Company of Northern Nigeria, Sokoto)”. By Saudat Yari Abdullahi was supervised

by Dr. Musa Yelwa Abubakar and it was met the regulations governing the award of Bachelor of

Science (B.Sc). Accounting of Usmanu Danfodiyo University, Sokoto, and is approved for its

contribution to knowledge and academic presentation.

________________________ ________________________
Dr. Sanusi Sa’ad Ahmad Date
Project Coordinator

________________________ ________________________
Dr. Musa Yelwa Abubakar Date
Project Supervisor

________________________ ________________________
Dr. Musa Yelwa Abubakar Date
Head of Department

________________________ ________________________
External Examiner Date

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 DEDICATION

This project work is dedicated to Almighty Allah who generously gave me the strength,

health and other resources to successfully accomplish this research, and also dedicated to my late

father Alh. Abdullahi Yari (May his soul rest in perfect peace) and my uncle Alh. Mustapha

Mohammed for their moral encouragement and prayers.

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 ACKNOWLEDGEMENT

In the name of Allah the beneficent, the merciful all praise and gratitude goes to

Almighty Allah who gave me the endurance, resilience, foresight and thoughtfulness to

undertake this project and complete it to the satisfaction of this Department.

My sincere gratitude goes to my supervisor Dr. Musa Yelwa Abubakar who worked

painstakingly in order to guide me throughout my project work, despite his tight schedule and

my short coming. May Almighty Allah continue to uplift him and prosper him throughout his life

(Ameen).

My utmost gratitude goes to Examination Officer Mal. A.A Kaura and all respective

lecturers in Accounting Department in persons of Dr. Sanusi Ahmad Sa’ad, Mal. Nasiru A.

Kaoje, Mal. A.A Aliyu, Mal. Y.Y Kaura, Mal. S.D Umar and rest of them, and also my regard to

Mal. Nura Koko, Mal. Ukashatu Abdulkareem for their contribution towards achieving academic

ambition.

I wish to acknowledge the contributions of my mother Hajia Nasare Maccido and my

uncle Alhaji Mustapha Muhammad Birnin Kebbi in obtaining a B.Sc Degree.

I also wish to acknowledge the motivations and contribution I got from my brother

Abubakar Muhammad Layya.

Lastly, I wish to thanks everybody mentioned and unmentioned who contributed or

assisted in one way or the towards the successful completion of this study.

God bless you all.

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 ABSTRACT

This study set out to study the Impact of Financial Statement on Investment Decision. (A case
study of Cement Company of Northern Nigeria Sokoto).
Financial statement provide the base statement its investment decision it is therefore critical that
it should provide a reliable permanent history of the financial activities of organization record in
archeological diary of measured event presented in orderly and systematically manner.
It readily communicate primarily financial information in nature investors and other practice
who make effective use of the information for an investment decision posited by (Onukwu 1998)
in regard to financial liquidity, profitability and ability of an entity, is an indication that these
information posited to be presented in publications are the balance sheet, profit and loss account
and cash flow statements in which case presented in an accounting manner and ethics.
Financial statement in accounting formation is an information needed by varieties of uses
classified into internal and external users as posited by American Institute of Chartered Public
Accounting (AICPA) is an evident which reveal the relative importance of such information to
government present and potential direct financial interest as posited to ‘Peter” indicated the
statement report shall use all disclosure, materiality, consistency, conservation, and formation
according to Paul (1968).
Guiding the financial statement analysis instituting comparativeness is the legal frame work
defining its requirement disclosure to the consumption of its users.

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 TABLE OF CONTENT
Title Page ………………………………………………………………………………………. i
Certification ……………………………………………………………………………………. ii
Dedication ……………………………………………………………………………………… iii
Acknowledgement ……………………………………………………………………………… iv
Abstract …………………………………………………………………………………………. v
Table of Content ………………………………………………………………………………... vi

CHAPTER ONE: Introduction

1.1 Background of the study …………………………………………………….………………. 1
1.2 Statement of the research problem ………………………………………….……………….. 2
1.3 Research Questions …………………………………………………………………….……. 3
1.4 Objectives of the study …………………………………………………………………….… 3
1.5 Research hypothesis …………………………………………………………………..…….. 3
1.6 Significance of the study ……………………………………………………………………. 4
1.7 Scope of the study …………………………………………………………………………... 4
1.8 Limitation of the study …………………………………………………………………….... 5

CHAPTER TWO: Literature Review

2.1 Introduction …………………………………………………………………………………. 6
2.2 Financial statement as a source of information ……………………………………………… 6
2.3 Accounting system as a source of institution ……………………………………………….. 7
2.4 Users of financial reporting …………………………………………………………………. 9
2.5 Standard of financial reporting …………………………………………………………….. 13
2.6 Relationship between balance sheet and income statement ……………………………….. 15
2.7 Financial statement analysis ……………………………………………………………….. 17
2.8 Summary …………………………………………………………………………………… 24

CHAPTER THREE: Research Methodology

3.1 Introduction ………………………………………………………………………………… 26
3.2 Population of the study …………………………………………………………………… 26

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3.3 Sample size and sampling procedure ……………………………………………………… 26
3.4 Method of data collection …………………………………………………………………. 27
3.5 Research Design …………………………………………………………………………… 27
3.6 Method of data presentation and analysis ………………………………………………… 28

CHAPTER FOUR: Data Presentation and Analysis

4.1 Introduction ………………………………………………………………………………… 29
4.2 Data presentation …………………………………………………………………………... 30
4.3 Testing of Hypothesis ……………………………………………………………………… 43
4.4 Summary of findings ……………………………………………………………………….. 46

CHAPTER FIVE: Summary, Conclusion and Recommendation

5.1 Introduction ………………………………………………………………………………… 47
5.2 Summary …………………………………………………………………………………… 47
5.3 Conclusion …………………………………………………………………………………. 48
5.4 Recommendation …………………………………………………………………………... 48
References …………………………………………………………………………………….... 50
Appendix ………………………………………………………………………….................... 51

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 CHAPTER ONE

1.1 BACKGROUND OF THE STUDY

Corporate organizations owe a duty to fully disclose matters concerning their

operations so as to aid investors in making investment decisions. Both large and small

organizations in addition to satisfying the legislating requirement tend. to retain

existing investors and to attract potential ones through the publication of their financial

statements where the capital stock of a corporation is widely held and its affairs are of

interest to general public. The discussions and illustrations of the study will be centered on

the financial statement presented to shareholders and also available for potential investors,

bond holders and trade creditors as a tool of information for investment decision.

Financial statement based on result on past activities are analyzed and interpreted as a

basis for predicting future rate of returns and assessment of risk.

Financial statement provides important information for a wide variety of decision,

investors draw information from the statement of the firm in whose security they contemplate

investing. Decision makers who contemplate acquiring total or partial ownership of an

enterprise expect to secure returns on their investment such as dividends and increase in

the value of their investment [capital gain]. Both dividends and increase in the value of shares

of company depends on the future profitability of the enterprise. So investors are interested

in future profitability. Past income (dividend) data are used to forecast returns for future

investment and increase in share prices.

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 Managers are responsible for the overall performance of the firm they make or take

decision in relations to available information; therefore they need relevant information readily

made available to make an effective decision for the purpose of this research.

1.2 STATEMENT OF THE RESEARCH PROBLEM

The problem confronting most business organization and investors are in the area of the

area of evaluation of financial ratio is often negelected until a problem occurs. The basic

analytical tools for the comparative income statement, profit and loss account and balance sheet.

It is observed that both investors and manager are either not aware of the relevance or otherwise

issue it source? In addition to lack of adequate valuation statement “Fact information” from

business to investors there is the lack of analytical intellect on the part of the investors to access

the reliability of financial statement. Also the intention of the study the financial statement and

trend to future timely present figures and the figure only have meaning in relation to when

compared with other fact.

However, these problems observed in the preceding paragraph tend to scare

away the both existing and potential investor who rather prefer to hold liquidity than

investing in business organization that are surrounded by bond of uncertainty until a specific

techniques are developed to mean sure liquidly, profitability, solvency etc.

The interest of this study will be clustered around the financial statements presented to

the shareholders, investors, bond holder, and trade creditor, as important information for

investment decision. Finally it is beyond the scope of this study to adequately look into the

entire above mentioned problem and to suggest possible solution will reveal key factors

responsible for under capacity utilization of financial statement in corporate investment and

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the relevance of the financial statement in inducing on effective decision making in business of

all kinds.

1.3 RESEARCH QUESTIONS

1. Is there relationship between financial statement and investor decision?

2. To what extent financial statement aid in investment decision?

3. Does financial statement aid in assessing the financial position of an organization?

4. Does analytical tools are set to aid prospective investors in accessing the financial position of

the cooperate organization?

1.4 OBJECTIVE OF THE STUDY

The main objective of this study is to examine the relevance of financial statement to investment

decision. The other objectives include:

1. To identify the relationship between financial statement and investment decision

2. To assess how financial statement aid in investment decision

3. To ascertain how financial statement aid in asserting the financial position of an

organization

4. To examine how a set of analytical tools will aid prospective investors in assessing the

financial position of the cooperate organizations.

1.5 RESEARCH HYPOTHESIS

The study will be based on the following hypotheses

HI: there is a relationship between financial statement and investment decision

Ho: There is no relationship between financial statement and investment decision.

H2: That financial statement and investment decision

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HO: financial statement dose not aid in investment decision

H3: financial statement determine how a set of analytical tools will aid prospective investors in

analytical tools will aid prospective investor in assessing the financial position of the cooperate

organization.

1.6 SIGNIFICANCE OF THE STUDY

This study will be of immense benefit to banks by improving the banking

performance financial analysts, investors, companies and financial organizations. This is

because the study intends to help these stockholders in decision making. The study will help

in widening Impact of Financial

Statement on Investment Decision, it will also make the organization to appreciate

the importance of sound financial statement in the provision of information necessary for

decision. It will review the improvement in the organization handling the financial statement and

show equally the ways through which improvement could be accomplished finally this research

will equally serve as a reference to students in this noble institution and other school who may

be interested to embark on a further research study of this nature and above all, report of this

study shall definitely add to existing knowledge in research methodology.

1.7 SCOPE OF THE STUDY

This study will be limited to a geographical entity known as Nigeria. The researcher

intends to know the effectiveness and efficiency of Impact of Financial Statement on

Investment Decision in private establishment in order to support its continued use and hence,

modify its use as necessary.

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1.8 LIMITATION OF THE STUDY

There are some limitations encountered by the researcher in the process of this research

which limited the scope to only Crusader Insurance Nigeria pic, some of the limitations are as

follows;

1. Uncooperative attitudes of the respondents; the researcher could not get some necessary

information from the respondents because of their negative attitude in their response to

the oral interview with the insurance officials and the questionnaires.

2. Time constraints; despite the time provided, it was not still enough for the researcher to so all

the relevant places like banks and company etc to get relevant information and due to the

combination of project and academics work.

3. Financial constraints; financial constraints is also another factor that limited the

researcher to go to many branches of insurance company and even other banks and

organizations. The researcher lacked finance for transportation, electronic library etc.

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 CHAPTER TWO

LITERATURE REVIEW

2.1 INTRODUCTION

This chapter is on review of related literature. The areas that will be reviewed are:

financial statement as a source of information, accounting system as a source of financial

statement, users of accounting information, decision making process by the users, standards of

financial reporting, relationship between balance sheet and income statement, financial statement

analysis and legal framework to financial statement disclosure.

2.2 FINANCIAL STATEMENT AS A SOURCE OF INFORMATION

Kieso et al, (1993:3) stated that, financial statement is the process of identifying,

measuring, recording and communicating the economic event of organization (business or non

business) to interested users of the information. The first part of the process: identifying,

involves selecting, these events that are considered evidence of economic activity relevant to a

particular organization.

Once identified, the economic event i.e. (transaction by accountants) must be measured in

financial term, that are quantified in money forms and it is not considered part of the company’s

financial information system. The measurement function hereby eliminates some significant

events (such as, the appointment of a new company president) because they lack measurability in

financial terms.

Once measured in dollars and cents, the events are recorded to provide a permanent

history of the financial activities of the organization.

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 However, the financial is communicated through the preparation and distribution of

accounting report, and the most common of which is called financial statement.

2.3 ACCOUNTING SYSTEM AS A SOURCE OF FINANCIAL STATEMENT

American Accounting Association (1966:p1) stated in the text that, accounting is the

guide post for management and every enterprise should know the activities carried on by it and

the financial score of an enterprise is kept by the accounting system and it points out the problem

faced or likely to be faced by the enterprise. Notwithstanding, it also bring to the notice of the

firm, the opportunities that are likely to arise and it indicates possible action when needed.

Steiss (2002) stated that, to understand the function of accounting properly, one need to

understand the meaning of accounting which can be defined as a process of identifying

measuring and communicating economic information to permit informed judgments and decision

by users of information. The objectives of accounting are to provide information for the

following:

1. Making decision concerning the use of limited resources, including the identification of

crucial decision areas the determination of objectives and goals.

2. Effectively directing and controlling organization, human and material resources.

3. Maintaining and reporting on the custodianship of resources.

4. Facilitating special functions and controls. Pandey (1981) stated that accounting main

objective is to provide information to its users, in order to make relevant decision and firm

judgments.

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 Consequent to the above, accounting also has certain broad social obligation as the

accounting information is used by a large body of people, such as customers employees,

governments, investors, e.t.c. (steiss, 2002)

In providing information to the user, accounting has to perform three basic functions

which include accumulation, measurement, and communication of information. “The accounting

system identifies and gathers data, and process of data accumulation involve the recording and

analysis of economics events. Records that are involved include journals and ledgers and they

are essentially historical in nature where the events recorded are the one which has already

occurred”. (Wild, 2005)

Accounting also perform measurement function where by monetary value (Rupees,

Dollars, Pounds, Naira) is assign to the economic events and some economies cannot be

measured accurately, as such, they are estimated.

Accounting is the language of business therefore, the information accumulated and

measured by the accounting system should be periodically communicated to the users. (Steiss,

2002)

Potential inventor or creditor or owner of a firm can adequately explain the essentiability

of financial statement or information to investor, creditors, and owner.

Performances form its financial report and they are generally interested in the earning of

dividend and growth pattern of the firms. Usually they take the services of financial analysis in

evaluating the performance of the firms. Employees and traders also make use of financial

information. “On the basic of the information revealed in the financial statement they can

bargain on matters relating to sale determination, bonus, fringe benefits, working condition e.t.c.

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this financial information is usually useful to employers and unions, as they get insight into

matters attracting the economic and social interest. Customers are not different for they may be

able to adequately explain the essentiability of a firm financial statement or information to

customers, because a careful study of financial statement period information about the prices

being charged by the firms”. (Pendlebury and Groves 1999)

Government also has interest in the financial statement to a very large extent for

regulatory purposes. The tax department of government has an interest in determining the taxable

income of the firms.

2.4 USERS OF FINANCIAL INFORMATION

According to American Institute of Certified Public Accountants (1970), accounting

information is needed by a veracity of people some users of accounting information have a direct

interest in the firms while others have an indirect interest. Those who are directly interested in

the financial information are owners, managers, creditors, investors, employees, customers, and

tax authorities. The indirect were of the financial information include, financial analysis, trade

societies, government, trade union e.t.c.

Owners have the primary interest in financial information. They have entrusted their

financial resources to the firm and therefore, would like to know periodically the performance of

the firm, Managers are the custodian of their investment and therefore, they must submit

periodical financial reports to the owners. (Igben, 2000).

Managers are responsible for the overall performance of the firm, therefore they need for

adequate financial information is there paramount concern in order to efficiently and effectively

carryout their duties. (Igben, 2000).

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 Creditors supply financial resources to the firms. They are interested in the continuing

profitable performance of the firms, so that they may regularly receive the interest and payment

of their principal sum. They need accounting information to evaluate the firms performance and

to determine the information that is accumulated through statement of report (Igben 2000). The

financial and report should be reliable and accurate with standard criteria such as full disclosure,

materiality, consistency, conservation and fairness should be adhered to, in communicating

information to user.

A second definition of accounting giving more emphasis to the decision making goal

rather than the process of recording, classifying, summarizing and interpreting is given by the

accounting principle board (A.P.B) of American Institute of Clarified Public Accountant. (1970)

According to APB accounting is a service activity. Its function is to provide quantitative,

information, primarily financial in nature, about economic entities that are intended to be useful

in making economic decision in making reasonable choices among alternative course of action.

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DECISION MAKING PROCESS BY THE USERS

Identification of users Investors, Bankers,

Suppliers,
Government, Agencies,
Management,
Employee Etc.

User’s information needs

Economic data Accounting Report User’s

system decision

Financial statement, Investing, appraising

special reports tax, tax loans, assessing tax,
returns. established budget,
etc.
Regulatory reports
management

Above is the illustration of decision making process by the users carved act from Pandey text

(1980) titled financial management.

DECISION PROCESS MAKING BY THE USERS

First user group are identified and their information needs determined. These needs

determine which economic data are gathered and processed by the accounting system penetrates

reports that communicate essential information to users.

Peter et al (2001:29) stated and subdivided the users into two categories; internal user and

external users, while the internal users are those who manage the business (officers and other

18
decision makers). The external users are those outside the business who have either a present or

potential direct financial interest (government, competitors and labour union).

Investors as external user are concerned with making investment decision as their

primary objective with increasing the wealth of the owners. Those who own business normally

do as with the intention of increasing their wealth and assessing the degree of risk associated

with their investment (Peter et al 2001).

Government on the other hand may require financial information from a business for

variety of reason; taxation, business for a based on the financial information as to the accounting

profit (subject to certain adjustment) government needs information on each business in order to

decide how much tax to be changed government contracts to be awarded.

Steiss (2004) states that, Competitors also have an interest in the financial information of

a business specifically for two main reasons:

1. They may wish to use the information as a branch mark for measuring their own

performance and efficiency for example, they may wish to see if they are more or less

profitable than the business.

2. They may wish to assess the financial strength of the business as a basic for making

decision concerning future policies for example, competitors may wish to know if the

business could withstand a takeover bit or engaged in a price-cutting campaign.

In addition to the above mentioned use it has also being observed the centers also

required financial information as business typical obtain part of the finance needed to set up and

run the business by borrowing from bank e.t.c. therefore enable lenders to assess the likely

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ability of the borrowing business to be able to repay the principle borrowed at the end for the

period of the loan as well as ability to pay the interest when it fall due.

Furthermore, suppliers of goods and services also need the financial statement

information so as to satisfy themselves that their customers will be able to honour contracts and

that the business is liquid as to be able to pay their short-term claims when falls due for payment.

Because of the fact most commercial sales are made on credit (the goods are delivered or the

service is rendered some weeks before cash is paid).

So suppliers will need to assess the likely ability of customers business to meet their

obligations.

2.5 STANDARDS OF FINANCIAL REPORTING

Horngren, Sundem and Stratton 2005 laments that, financial statements communicate or report

financial information to owners or others. Over a period of time certain reporting standards or

conventions have been developed, the major standards or convention of reporting

(communication) function of the financial statement (Homgren et al., 2005) are as follows:

1. Full disclosure

2. Materiality

3. Consistency

4. Conservation

5. Fairness

Those will explain in this below

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Full disclosure: The purpose of the financial statement is to communicate financial result of the

firms activities to the user as well as to provide them with all possible facts to make relevant

investment decisions.

For a higher degree of reliability its be placed on the financial statement they must

provide understandable, complete and fair disclosure of all relevant information.

As far as possible details of various items of asset liabilities, revenue and expenses

should be given in the financial statement can be understood fully well by the user of the

statements only if they are conversant with the technical accounting terms. They can of course

take the help of financial experts to understand the financial statement. The user of financial

statements should also be aware of the fact that every bit of information needed by them to make

investment decision can be provided by the financial statement.

Materiality: The materiality standard deal with the relative importance of accounting only the

material information needed be fully disclosed in the financial statement. It is also significant to

a user of the financial statement in decision making.

Consistency: Consistency is essential for clear and correct understanding and interpretation of

the financial statements. To accumulate measure and communicate accounting data, a numbers

of concepts of principle are followed by the accountant. Some concepts are so broad in nature

that different method can be used to treat a given event.

For example, inventory may be valued of cost or market price whichever is less, the

standard of consistency required that a method decided once to treat a given even should be

consistently followed.

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Conversatism: The convention of conservation means that all unfavourable even should be as

recognized at the earlier and favourable even should be recorded only when they actually take

place. Thus if an event can be recorded in alternative ways, the accountant should ordinary

choose that alternative that results in lower asset value. For example when the accountant is

faced, with the problem of valuing inventories, he chooses lower of the cost or the market value

in accordance with the invention of conservation. The faboruable prospects are not anticipated.

Fairness: The financial statements have many users, their information requirement may conflict.

The financial reports should be fair to the sense that they should not fabour certain groups at the

cost of others.

Generally the owner’s interests are given top priority. But the interest of other groups

should not be neglected completely fairness required that the financial statement should gives a

fair presentation of summary of the economic even that was used to prepare them. It implies that

the financial statements are prepared in accordance with the generally accepted account of

principles. The standard fairness intends to ensure justice and equity in reporting financial event

of the firms.

2.6 RELATIONSHIP BETWEEN BALANCE SHEET AND INCOME STATEMENT

Robert et al., (2001) in their book titled; Management Accounting Principles identified

the relationship between balance sheet and income statement are not too separate and

independent statement but are related to each others. The income statement is a link between the

balance sheet at the beginning and end of the period. The fact emphasizes the role of the income

statement as a link between consecutive statements of financial position.

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 Net income (or net loss) for a period equal to the change in net assess or owners equity

during that period at a starting point.

The difference in beginning and ending owners equity is the net income or less that is

N1 = Ee – Eb ……………………….1

Where Ee is owners equity at the end and Eb is owners equity in the beginning.

However, equity also changes due to additional investment and withdraw all during the period

should be adjusted to compete the net income. The owner equity at the end will be equal to the

following.

(Ee – Eb) = N1 = Io – Wo………………..2

Where Io represents additional investment by owners and Wo represents withdrawal by owner

during the period, rearranging equation 2 the net.

(Ec – Eb) = (Io – Wo) .…………………...3

If the net income computed has negative amount it would mean net lose. Equation 3 can also be

written as:

(Ee – Eb) = NI = (Io – Wo)…………………..4

Equation 4 reveals that changes in owners equity during the period is equal to the sum of the net

income and the net additional investment the less will be the change caused in owners equity by

net income infant revenue and expenses events are major causes of change of owners equity.

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2.7 FINANCIAL STATEMENT ANALYSIS

Steiss (2002) identified several types of analysis that can be performed on company financial

statements. All these analysis rely on comparison enhance the utility or practical value of

accounting information. Pandey I.M cited an example that knowing that a company’s income last

year was N25,000 and even more useful information is gained if the accounts of sale and assets

of the company are known. Steiss said such relationship may be expressed as follows:

1. Absolute increase and decrease for an item from period to the next.

2. Percentage increase and decrease for an item from one period to the next.

3. Trend percentages.

4. Percentages of finish item to an aggregate total ratios item (1 and 2 make use of

comparative statements).

Comparative financial statements; Pandey stated that comparative financial statement for two or

more successive period inside by side columns. The calculations of N changes or percentages

changes in the statement items total is known as “HORIZONTAL ANALYSIS”. This type of

analysis helps detect changes in a company’s performance and highlight trends.

Trend percentages: They are similar to horizontal analysis except that a basic year is selected

and comparison are made to the basic year. Trend percentages are useful for campaigning

financial statement over several years because they disclose changes and trend occurring through

time.

Vertical analysis: It is done on the composition of a single financial statement such income

statement. Here each item is expressed as percentage of cost of foods sold to sales or the gross

margin on sales.

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 That is the increase or decrease in sale or the gross margin in sales that is the increase or

decrease in sales and gross margin.

Ratio analysis: Logical relationship that exist between certain accounts or items in a company’s

financial statements. These accounts may appear on the same statement or two different

statements.

The naira amount of the related accounts or items are set up in fraction form and called

ratios. This ratios are classified broadly into (Pandey in 1980) stated the following ratios;

a. Liquidity ratios

b. Equity or long term solvency ratio

c. Profitability ratio assets

d. Market text

Liquidity Ratio: Barges Alexander (1993) 26 in his book titled: the effect of cost of capital

structure on the cost of capital stated that liquidity ratio is used to indicated a company short

term debt paying ability show interested parties a company short term debt paying ability show

interested parties a company capacity to meet marketing current liability. In addition working or

current capital ratio indicates liabilities from current assets and this way shows the strength of

the company working capital position.

Formula

Current ratio = Current asset

Current liability

Usually stated in terms of number of naira or current asset to one naira of current liability.

25
Acid test (quick) ratio: this is the ratio of current asset (cash marketable securities and not

receivable) to current liability.

Formula

Acid test ratio = Quick asset

Current liability

Account receivable turnover: Turnover is the relationship between the amount of an asset and

some measures of its use account. Receivable turnover is the number of times per year that the

average amount of receivable is collected.

A.R.T = Net credit sale (or net loss)

Average net account receivable

When ratio compare and income statement item (like accounts receivable) the balance sheet item

should be an average.

Inventory turnover: Kennedy, Ralph data Sewart Y.M.C Mullen in their book title financial

statement said that inventory turnover shares the number of item its average inventory in sold

during the period.

Formula

I.T.O = Cost of food sold

Average inventory

Total asset turnover: It shows relationship between naira volume of sales and average total

sales in business.

26
Formula

Net sales
Average total assets

This ratio measure the efficiency which a company uses it assets to generate sales.

Equity or long solvency ratio: It shows the relationship of debt and equity financial in a

company.

Equity ratio: The basic sources of assets if a business are referred to as total equities, but in ratio

analysis the term equity refers to share holder’s equity. Thus equity indicates the proportion of

total assets that is provided shareholders “owners” on a given data.

Formula

Shareholders equities
Total assets

A high equity ratio indicates the existence of a large protective better for creditors.

But owner point of view on high equity is not desirable; if borrowed funds can be used by

the business to generate income in excess of the net after tax cost of the interest on such

borrowed funds a lower percentage of shareholders equity may be desirable.

Shareholders equity to debt ratio: It shows the relationship between shareholders funds to

borrowed fund as part of the total debt borrowed fund as part of the total debt of the economy.

Formula

Shareholders equity
Total debt

27
PROFITABILITY RATIOS

Kennedy, Ralph data and Stewart Y. (1968) stated in their book titled financial statement that a

company should on profit to survive and grow over a long period of time. Profits are essential,

but it would be wrong to assume every action initiated by the management of the company

should be achiest of maximizing profit irrespective of social consequence. It is unfortunate that

the word “profit” is looked upon as term of abuse since some firms always act to maximize profit

at the lost of employees.

CUSTOMERS AND SECURITY

Generally two major type of profitability ratio are calculated.

1. Profitability in relation to sale

2. Profitability in relation to investment

Gross profit margin: The first profitability ratio in relation to sales the gross profit margin (or

simple gross margin it is calculated by finding the gross profit by sales.

Formula

Sales of gross sold

Sales

This ratio tells us the profit of the firm relative to sales after deducting the cost of producing the

good sold. It indicates efficiency of operation as well as how products are prices.

Net profit margin: A reasonable gross profit margin is necessary can adequate operate expenses

and income taxes are subtract from the gross profit. The net profit margin ratio is measured by

building net profit after tax by sales.

28
Formula

Net profit after tax

Sales

Operating ratio: The operating ratio is an important ratio that explain the change in the net

profit margin ratio; this ratio is computed by dividing all operating expenses cost of goods sold

selling expenses and general and administrative expenses by sales.

Cost of food sold = Operating expenses

Sales

Earning per-share: These measures are widely used to appraise a company, operating which is

the earnings available to ordinary share outstanding.

E.P.S = Net income available to ordinary share

Weighted average number of ordinary share outstanding

Time interest earned: it shows whether a company can meet its required interest payment when

they become due.

Formula

Income before interest and taxes

Interest expenses

Rate of return on equity: This ratio tell us the earning power on shareholder book investment and

is frequently wed in comparing two or more forms in an industry.

Formula

Net profit after taxes – Preferred stock dividend

Shareholders – Equity

29
Investment ratio: Dantago (1996:281) financial statement of quated company are use by

prospective and existing investors and their advisers, in order to make investment decision like

holding. Buying or selling shares, decision or investment are assisted by investment ratio to be

calculated from the financial statement after get business.

Earnings per share ratio: This ratio measure the success of a given business in terms of profit

attributable to each share held in the company.

 Profit before tax but after interest

 Number of share (common stock).

Earning yield ratio: It is the reciprocal ratio of price earnings ratio, showing the returns on

current market prices.

Formula

Earning per share

Market price × 100

Dividend per share (DPS) ratio: It indicates the dividend payable per share of a company.

Formula

Dividend paid or proposed

Number of share

Dividend yield: It is a ratio which relates the income from share (the dividend) of the investment

in the business.

30
Formula

Dividend per share

Market price × 100

Dividend cover ratio: This shows the number of items dividend is covered by earning.

Formula

Earning
Dividend

2.8 SUMMARY

Since financial statement provide the base statement its investment decision it is therefore

critical that it should provide a reliable permanent history of the financial activities of

organization record in archeological diary of measured event presented in orderly and

systematically manner.

It readily communicate primarily financial information in nature investors and other

practice who make effective use of the information for an investment decision posited by

(Onukwu 1998) in regard to financial liquidity, profitability and ability of an entity, is an

indication that these information posited to be presented in publications are the balance sheet,

profit and loss account and cash flow statements in which case presented in an accounting

manner and ethics.

Financial statement in acc/ounting formation is an information needed by varieties of

uses classified into internal and external users as posited by American Institute of Chartered

Public Accounting (AICPA) is an evident which reveal the relative importance of such

information to government present and potential direct financial interest as posited to ‘Peter”

31
indicated the statement report shall use all disclosure, materiality, consistency, conservation, and

formation according to Paul (1968).

Guiding the financial statement analysis instituting comparativeness is the legal frame

work defining its requirement disclosure to the consumption of its users.

32
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 INTRODUCTION

This chapter presents the methodology used for data collection under the following sub

headings: population of the study, sample size and sampling procedure, method of data

collection, research design and method of data presentation and analysis and summary.

3.2 POPULATION OF THE STUDY

The targeted population for this study includes all finance officers and the Management

of Sokoto State investment company they are 13 in number, the share holders of Dangote

Cement plc, they are 15,494 in number and the management of Cement Company of Northern in

Nigeria, they are 26 in number share holders numbering 1,256. The combine population of the

targeted shareholders and management staff of the three companies.

3.3 SAMPLE SIZE AND SAMPLING PROCEDURE

The sampled for this study includes employees of Dangote Cement Company, Sokoto

state investment company, cement company of Northern Nigeria and other well informed

members of the public. In all a total of 65 questionnaires will be administered to the respondents.

15 questionnaires issued to the staff of Dangote Cement Company, 17 questionnaires issued to

Sokoto investment company staff 17 questionnaires will be issued to cement company of

Northern Nigeria staff and 14 questionnaires issued to the members of the public.

In administering the questionnaires to the respondents of the four groups, the researcher used the

simple random sampling technique. That is to say that the selection of the sample from each of

33
the organization and the public was not done putting into consideration particular group

questionnaires will be distributed to the staff randomly. The simple random sampling allows

every element in the population equal opportunity to be selected. This implies no element of the

population has been omitted deliberately.

The questionnaires will be administered randomly to the respondents. Therefore, the

simple random sampling techniques will be employed. The simple random sampling allows

every element in the population equal opportunity to be selected. This implies no element of the

population has been omitted deliberately.

3.4 METHOD OF DATA COLLECTION

The method use for data collection is the primary source of data collection. The primary

source of data collection involves the use of questionnaire or interview schedule to obtain

responses from the respondents on the subject. A questionnaire was designed and will be

administered to the respondents. The responses of the respondents will be retrieved from the

questionnaire and converted as data for the study.

3.5 RESEARCH DESIGN

The study adopted a descriptive survey design and a questionnaire will be designed to aid

on soliciting responses from the respondents on the subject. Descriptive survey is concerned with

the nature and degree of existing conditions. Best and Khan (1995) observed that the descriptive

survey method enables the researcher to obtain the opinion of the representative sample of the

target population as to be able to infer the perception of the entire population. The rationable for

the descriptive survey is that the fact that the information provided is in itself the answer to the

research questions posed. Therefore, the choice of this design is justified because it helps to

34
describe record, analyze and interpret the condition that exists in a study. Is less expensive and

less time consuming.

3.6 METHOD OF DATA PRESENTATION AND ANALYSIS

The data that will be gathered from the questionnaires issued to the respondents will be

presented and analyzed through the use of frequency distribution tables and simple percentage

method. Percentage will be used so as to study the degree of responses.

In testing the hypothesis, chi-square method will be applied. Chi-square is defined as:

X2 = Σ (FO - Fe)2
Fe

Where FO = Observed frequencies

Fe = Expected frequencies

Σ = Addition

The alternative hypotheses will be accepted since calculated value is greater than the chi-square

value.

35
 CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1 INTRODUCTION

This chapter is on data presentation and analysis. Data retrieved from the questionnaire

administered to the respondents was be analysed through the use frequency table and simple

percentage method.

Questionnaire administered to the respondents.

Table 1: Questionnaires distributed to respondents

Questionnaires Number Percentage%

Returned questionnaires 50 76.92

Unreturned questionnaires 15 23.0

TOTAL 65 100

Source: Questionnaire administered

The table above shows the questionnaire distributed to the respondents. On the whole, a

total of 65 questionnaire were distributed out of which 50 (76.92) at the questionnaires were

completed returned, while, 15 (23%) of the questionnaires were not returned back to the

researcher.

Therefore the analysis was based on the 50 returned questionnaires.

36
4.2 DATA PRESENTATION AND ANALYSIS

Table 2: Gender representation of the respondents

Gender Frequency Percentage%

Male 38 76

Female 12 24

TOTAL 50 100

Source: Field survey 2015

Responses on the gender of the respondents shows that 38 (76%) of the respondents indicated

“male”, while 12 (24%) of the respondents indicated “female”.

Therefore, going by the responses of the majority of the respondents it can be concluded

that they are males.

Table 3: Working experience on the respondents

Working experience Frequency Percentage%

1/3 years 8 16

4/6 years 24 48

7/10 years 12 24

Above 10 years 6 12

TOTAL 50 100

Source: Field survey 2015

37
 Responses on working experience of the respondents shows that, 8 (16%) of the

respondents indicated “1/3 years”, 24(48%) of the respondents indicated “4/6 years”, and 6(12%)

of the respondents indicate above 10 years.

Therefore going, by the responses of the majority of the respondents it can be concluded

that they are between 4-6 years working experience.

Table 4: Level within the firm of respondents

level within the firm Frequency Percentage%

Auditors 20 40

Manager 5 10

Accountant 12 24

Investor 13 26

Other ___ Nil

TOTAL 50 100

Source: Field survey 2015

Responses on levels within the firm shows that, 20(40%) of the respondents are Auditors,

5(10%) of the respondents shows are managers, 12(24%) of the respondents shows are

Accountant, and 13(26%) of the respondents are Investors.

Therefore, by the responses of the majority of the respondents it can be concluded that

they are investors.

38
Table 5: Educational qualification of the respondents

Qualification Frequency Percentage%

Diploma 5 10

Bachelors 12 24

Masters 20 40

Ph.D 5 10

Other 8 16

TOTAL 50 100

Source: Field survey 2015

Responses on the qualification of the respondents shows that, 25(10%) of the respondents

indicated “Diploma”, 12(24%) of the respondents indicated “Bachelors”, and 20(40%) of the

respondents indicated “Masters”.

Therefore, going by the responses of the majority of the respondents it can be concluded

that they are Masters Graduates.

Table 6: Occupation of the respondents

Occupation Frequency Percentage%

Student - Nil

Business man/woman 12 24

Public servant 18 36

Private employee 20 40

TOTAL 50 100

Source: Field survey 2015

39
 Respondents in respect of the occupation of the respondents shows that, 12(24%) of the

respondents indicated business man/woman, 18(30%) of the respondents indicated public servant

and 20(40%) of the respondents indicated private employee.

In the final analysis, going by the responses of the majority of the respondents it can be

concluded that they are private employees.

Table 7: Relevance financial statement to investment decision

Options Frequency Percentage%

Strongly Agree 38 76

Agree 12 24

Strongly disagree - Nil

No idea - Nil

TOTAL 50 100

Source: Field survey 2015

A response to the question is financial statement relevant in investment decision? Shows

that, 38(76%) of the respondents indicated strongly Agree, while 12(24%) of the respondents

indicated ‘Agree’.

Therefore, by the responses of the majority of the respondents it can be concluded that

financial statement relevant in investment decision. This is an indication that financial statement

is guide to organization in making decision for any investment or a guide to an investor intending

to invest in a venture.

40
Table 8: Reason for financial statement in investment decision

Variables Frequency Percentage%

To know the financial position of an 36 72

organization.

To know how much need to be invested 14 28

To know how much that can be generated - Nil

All of the above - Nil

TOTAL 50 100

Source: Field survey 2015

Responses to the question, why is financial statement relevant to investment decision?

Shows that 36(72%) of the respondents indicated “To know the financial position of an

organization”, While 14(28%) of the respondents indicated “To know how much need to be

invested”.

Therefore, going by the responses of the majority of the respondents it can be concluded

that reason why financial statement relevant to investment decision is to know the financial

position of an organization. This is an indication that the financial position of an organization

determines whether it can go into new investment or not or whether investors will be attracted to

invest in the organization.

41
Table 9: Financial statement reveal the financial position of a company to know whether to

invest or not

Responses Frequency Percentage%

It does greatly 50 100

It does fairly - Nil

It does in a little way - Nil

It does not in anyway - Nil

TOTAL 50 100

Source: Field survey 2015

Responses to the questionnaire, Does financial statement reveal the financial position of a

company to know whether to invest or not? Shows that, 50 of the respondents representing the

total number of the respondents indicated “it does greatly”.

Therefore, it can be agreed that financial statement reveals the financial position of a

company to know whether to invest or not.

This is an indication that financial statement aids in investment decision.

42
Table 10: Company need information from financial statement before it decides to invest

Variables Frequency Percentage%

It does greatly 50 100

It does a little - Nil

It does fairly - Nil

It does not - Nil

TOTAL 50 100

Source: Field survey 2015

Responses to the question ‘does a company need information from financial statement

before it decides to invest? Shows that, 50 of the respondent representing the total number of the

respondent indicated “it does greatly”.

Therefore, going by the responses of the respondent it can be agree that a company needs

information from financial statement before it decides to invest. This is an indication that

investment decision can’t be made without ascertaining the financial position of the company

through its financial statement.

43
Table 11: Financial statement save an organization from making wrong investment

decision

Options Frequency Percentage%

Strongly Agree 50 100

Strongly disagree - Nil

Agree - Nil

Disagree - Nil

TOTAL 50 100

Source: Field survey 2015

Responses to the question, can financial statement save an organization from making

wrong investment decision? Shows that 50 of respondents representing the total number of the

respondents indicated ‘strongly agree’.

Therefore, it can be concluded that financial statement save an organization from making

wrong investment decision. This is an indication that organization needs financial statement to

protect them from making wrong investment decision.

44
Table 12: Rate the relevance of financial statement in investment decision

Response Frequency Percentage%

Very high 42 84

high 8 16

Fairly - Nil

Low - Nil

TOTAL 50 100

Source: Field survey 2015

Respondents rating of the relevance of financial statement in investment decision shows

that 42 (84%) of the respondents indicated ‘very high” while 8 (16%) of the respondents

indicated ‘High’. Therefore, going by the responses of the majority of the respondents it can be

concluded that the relevance of financial statement in investment decision is very high.

Table 13: Financial Statement reveal the competence of Management of the Company

Options Frequency Percentage%

Strongly Agreed 25 50

Agreed 25 50

Strongly Disagree - -

Disagree - -

TOTAL 50 100

Source: Field survey 2015

45
Table 13 shows that all 50 of the respondents (Strongly Agreed and Agreed) that financial

statement reveal the competence of management of the company while none of the company

while none of the respondents disagree.

Table 14: Relationship between Financial Statement and Investment Decision

Options Frequency Percentage%

Strongly Agreed 50 100

Agreed - -

Strongly Disagree - -

Disagree - -

TOTAL 50 100

Source: Field survey 2015

Table 14 shows that all 50 respondents strongly agreed that there is a relationship between

financial statement and investment and investment decision while none of the respondents

Strongly Disagreed and Disagreed.

Table 15: Financial Statement influence the Investors to buy shares from the Company

Options Frequency Percentage%

Strongly Agreed 48 98

Agreed - -

Strongly Disagree 2 4

Disagree - -

TOTAL 50 100

Source: Field survey 2015

46
Table 15 shows that 48 of the respondents (98%) strongly agreed that the state of financial

statement influence the investors to buy shares from the company while 2 of the respondents

(4%) strongly disagree.

Table 16: Financial statement afford users the opportunity of using funds flow analysis

Options Frequency Percentage%

Strongly Agreed - -

Agreed 42 82

Strongly Disagree 8 16

Disagree - -

TOTAL 50 100

Source: Field survey 2015

Table 16 shows that 42 respondents (82%) agree that the financial statement afford users the

opportunity of using funds flow analysis while 8 respondents (16%) disagree.

Table 17: Ratio analysis a veritable tool for Investment Decision

Options Frequency Percentage%

Strongly Agreed 50 100

Agreed - -

Strongly Disagree - -

Disagree - -

TOTAL 50 100

Source: Field survey 2015

47
Table 17 shows that all 50 respondents Strongly Agreed that ratio is a veritable tool for

investment decision while none of the respondents disagree.

Table 18: Financial Statement used for Investment Decision in a Company

Options Frequency Percentage%

Strongly Agreed 50 100

Agreed - -

Strongly Disagree - -

Disagree - -

TOTAL 50 100

Source: Field survey 2015

Table 18 shows that all 50 respondents Strongly Agreed that financial statement is used for

investment decision in a company while none of the respondents Disagree.

Table 19: Financial statement help users to know the state of affairs of the companies

Options Frequency Percentage%

Strongly Agreed 49 98

Agreed - -

Strongly Disagree 1 2

Disagree - -

TOTAL 50 100

Source: Field survey 2015

48
Table 19 shows that 49 respondents (98%) strongly agreed that financial statement help users to

know the state of affairs of the companies while 1 respondent (2%) strongly disagreed.

Table 20: Financial Statement in forecasting future performance

Options Frequency Percentage%

Strongly Agreed 23 46

Agreed 22 44

Strongly Disagree 5 10

Disagree - -

TOTAL 50 100

Source: Field survey 2015

Table 20 shows that 23 and 22 respondents strongly agree and agree respectively that it is

appropriate to believe in the ability of past financial statement in forecasting future performance

which is 46% and 44% respectively, while 5 respondents (10%) disagreed.

Table 21: Financial Statement of a Company predict the future financial stand of a
Company

Options Frequency Percentage%

Strongly Agreed 43 86

Agreed - -

Strongly Disagree - -

Disagree 7 4

TOTAL 50 100

Source: Field survey 2015

49
Table 21 shows that 43 respondents (86%) strongly agreed that the financial statement of a

company predict the future financial stand of a company while 7 respondents (4%) disagree.

4.3 HYPOTHESES TESTING

This segment of the chapter treats the testing of hypnotically statement to ascertain

whether they are accepted or not, chi-square method will be used to test the hypotheses.

Table 4.3.1.A: There is a relationship between financial statement and investment decision?

Variable Yes No Total

Yes 42 - 42

No - 8 8

Total 42 8 50

4.3.1B: Contingency table.

R/C Fo Fe Fo-fe (fo-fe)2 (𝐟𝐟 − 𝐟𝐟)𝟐

𝐟𝐟

1-1 42 35.28 6.72 45.15 9.87

1-2 - 6.72 6.72 45.15 38.43

2-1 - 6.72 6.72 45.15 38.43

2-2 8 1.28 6.72 45.15 43.87

Total 50 50 26.88 180.6 130.6

50
To find fe

Fe = Re × C+
G+

Fe1= 42 × 42 = 35.28
50

Fe3 = 8 × 42 = 6.72
50

Fe4 = 8 × 8 = 1.28
50

Degree of freedom – Df = (C-1) (V-1)

= (2-1) (2-1)

=1×1

=1

The calculated value = 130.6, we therefore test at 8% level of significance we check 1

under 0.05 in the table of chi-square = 53.8. Since the calculated value is greater than value in

the hypothesis. Therefore alternative hypothesis is accepted over the Null hypothesis.

Table 4.3.2A: That financial statement of an organization determines investors decision?

Variable Yes No Total

Yes 40 - 40

No - 10 10

Total 40 10 50

51
R/C Fo Fe Fo-fe (fo-fe)2 (𝐟𝐟 − 𝐟𝐟)𝟐

𝐟𝐟

1-1 40 32 8 64 32

1-2 - 8 -8 64 56

2-1 - 8 -8 64 56

2-2 10 2 8 64 56

Total 50 50 32 256 200

To find fe we use this method

Fe = rt × ct
Gt

Fe1= 40 × 40 = 32
50

Fe2 = 40 × 8 = 8
50

Fe3 = 8 × 40 = 8
50

Fe4 = 8 × 8 = 10
50

Degree of freedom – Df = (C-1) (V-1)

= (2-1) (2-1)

=1×1

=1

52
 The calculated value = 200, we therefore test at 10% level of significance we check 1

under 0.5 in the table of chi-square = 124. Since the calculated value is greater than value in the

hypothesis, alternative hypothesis is accepted.

4.4 SUMMARY OF FINDINGS

From the investigation carried out on the relevance of financial statement in decision

making findings reveal as follows. That financial statement in decision making. The findings

revealed as follows:

That financial statement is relevant in investment decision by an organization or

entrepreneur. That the main reason why financial statement is relevant in investment decision is

to know the financial position of an organization to ascertain whether it is right to invest or not.

That financial statement aid investment into new business and it reveals the financial position of

a company to know whether to invest or not.

Finally, that financial statement is highly rated to be relevant in investment decision.

53
 CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1 INTRODUCTION

This chapter is on the summary and conclusion of the study. Recommendations will be

attempted in this chapter.

5.2 SUMMARY OF FINDINGS

This study set out to study the Impact of Financial Statement on Investment Decision. (A

case study of Cement Company of Northern Nigeria Sokoto).

From the test of hypotheses, we discovered the following;

1. Financial statement is used to be relied upon in investment decision.

2. Financial statements are useful for forecasting company’s performance.

3. There is a positive and significant relationship between financial statement and

investment decision.

4. Financial statements provide various facts of a business such as, accurate records of its

income and expenses and also its assets and liabilities.

5. The respondents agree that the financial statement plays an important role in investment

decision.

Finally, the basic aim of this study is to determine the Impact of Financial Statement on

Investment Decision. This is because prospective investor’s uses financial statement of concerns

as a major parameter for assessing the profitability and the risk of investing in such ventures and

54
the aim of financial statement is to provide financial information about an entity to interested

parties.

The information can become meaningful through financial interpretations and decisions

unveil the essence of financial statement as the major custodian of financial information

necessary for any investment decision. Investment are not made on a vacuum hence, there are

bedrocks on which they will stand.

5.2 CONCLUSION

The researcher concludes by saying that financial statement plays a vital role in

investment decision; for instance, where companies invest hundreds of billions of naira every

year in fixed assets. By their nature, these investment decisions have the potential to affect the

firm’s fortunes over several years. For a good decision can boost earning sharply and

dramatically increase the value of the firm. This financial information can be subjected to

various scrutiny and analysis depending on the investors before making their investment

decisions. This is quickly appreciated in the banking sector as one of the major criteria’s the

demand from their borrowers at the financial statements of the concern for various years. This is

subjected to their analysis and interpretations before they can go ahead in the loan negotiation

concerning any company. Hence it is opined that companies should try as much as possible to

posit financial statements that reflects a true and fair view of what is propose to represent as a

way of appreciating their companies the more.

5.3 RECOMMENDATIONS

Having gone through this study the researcher recommend the following as a way of

incurring that financial statement plays a vital role in investment decisions.

55
1. Every company should ensure that all material fact is reflected in their financial statement

2. There should be prompt provision of the financial statement at the end of each financial year.

3. Investment decision should not be on a vacuum or rule of thumb rather, the financial

statements should be used as bedrock.

4. Every company should adhere to the demand of subjecting their financial statements to

statutory audit as a way of authenticating their contents.

5. No investment decisions on a company should be taken without the consideration of a

company’s financial statements.

56
 REFERENCES
Adebiyi, K. A. et al. (2006). ICAN Study Pack Financial Accounting. Nigeria; V.1 Publishing
Ltd.
Akinsoyime, A. B. (1990). The Objective of Accounting in a Dynamic Society Seminar NCAI
Jos.
Black, J. (1990). Some Financial Analysis Techniques ACCA Student Newsletter.
Chukwuemeka, E. O. (2002). Research Methods and Thesis Writing: A Multi-Disciplinary
Approach. Nigeria; HRV Publisher.
Drury, C. (2004). Management and Cost Accounting. 6th edition. Singapore; Seng Lec Press.
Ezeamama, M. C. (2005). Fundamentals of Financial Management. Enugu; Erna Press Ltd.
Gautarn, U. S. (2005). Accountancy. New Delhi; Vrinda Publications.
Heinz, W. and Harold, K. (2005). Management: A Global Perspective. 11th edition, New Delhi;
Tata McGraw-Hill Publishing Company Ltd.
Jenfa B. L. (2000). Study Notes on Professional Seminar NCA Jos.
Jennings, A. R. (2004). Financial Accounting. 2nd edition, Nigeria; Thomson Learning.
Lucey, T. (2002). Costing. 6th edition. Britain; ELST Publication.
Osuala, E. C. (2005). Introduction to Research Methodology. 3rd edition. Enugu; Africa First
Publisher Ltd.

57
 APPENDIX
THE IMPACT OF FINANCIAL STATEMENT ON INVESTMENT DECISION
(A Case Study of Cement Company of Northern Nigeria Plc Sokoto)
QUESTIONNAIRE SCHEDULE
Good day sir/ma.
I will like to ask you some few questioned designed to generate information on “impact of
financial statement an investment decision”.
The information to be collected is for research purpose only and will be treated with
maximum confidentiality.
Please be kind tick the answers to these questions below.
Thank you.

SECTION A: (SOCIO-DEMOGRAPHIC DATA)

Q-1 Gender
a. Male [ ] b. Female [ ]
Q-2 Working experience
a. 1-3yrs [ ] b. 4-6yrs [ ] c.7-10yrs [ ] d. Above 10yrs [ ]
Q-3 What is your level within the firm
a. Auditor [ ] b. Manager [ ] c. Accountant [ ] d. Investor [ ]
b. Other specify [ ]
Q-4 Qualification?
a. Diploma [ ] b. Bachelors [ ] c. Masters [ ] d. Ph.D [ ] e. Other [ ]
Q-5 Occupation
a. Student [ ] b. Business man [ ] c. Public servant [ ]
c. Private employee [ ] e. Others specify [ ]
QUESTION 6-12 will provide information on the impact of financial statement in investment
decision.
Q-6 is financial statement relevant in investment decision?
a. Strongly agree[ ] b. Agree[ ] c. Strongly disagree[ ] d. No idea[ ]

58
Q-7 If yes why is financial statement relevant to investment decision?
a. To know the financial position of an organization [ ]
b. To know how much need to be invested [ ]
c. To know how much that can be generated [ ]
d. All of the above [ ]
Q-8 Does financial statement reveals the financial position of a company to know whether to
invest or not?
a. It does greatly[ ] b. It does fairly[ ] c. It does a little way [ ]
d. It does not in any way [ ]
Q-9 Does a company need information from the financial statement before it decides to invest?
a. It does greatly[ ] b. It does a little[ ] c. It does fairly[ ]
d. It does not[ ]
Q-10 Can financial statement save an organization from making wrong investment decision?
a. Strongly agree[ ] b. Strongly disagree[ ] c. Agree[ ] d. Disagree[ ]
Q-11 How can you rate the relevance of financial statement in investment decision?
a. Very high[ ] b. High[ ] c. Fairly high[ ] d. Low[ ]
Q-12 Financial statement reveal the competence of management of the company?
a. Strongly agree[ ] b. Strongly disagree[ ] c. Agree[ ] d. Disagree[ ]
Q-13 Is there any relationship between financial statement and investment decision?
a. Strongly agree[ ] b. Strongly disagree[ ] c. Agree[ ] d. Disagree[ ]
Q-14 Does the state of the financial statement influence he investors to buy shares from the
company?
a. Strongly agree[ ] b. Strongly disagree[ ] c. Agree[ ] d. Disagree[ ]
Q-15 Does the financial statement afford users the opportunity of using fund flow analysis?
a. Strongly agree[ ] b. Strongly disagree[ ] c. Agree[ ] d. Disagree[ ]
Q-16 Is ratio analysis a variable tool for investment decision?
a. Strongly agree[ ] b. Strongly disagree[ ] c. Agree[ ] d. Disagree[ ]
Q-17 Financial statement used for investment decision in a company?
a. Strongly agree[ ] b. Strongly disagree[ ] c. Agree[ ] d. Disagree[ ]

59
Q-18 Does financial statement help users to know the state of affairs of the companies?
a. Strongly agree[ ] b. Strongly disagree[ ] c. Agree[ ] d. Disagree[ ]
Q-19 Is it appropriate to believe 9in the ability of past financial statement in forecasting future
performance?
a. Strongly agree[ ] b. Strongly disagree[ ] c. Agree[ ] d. Disagree[ ]
Q-20 Does the financial statement of a company predict the future financial stand of a company?
a. Strongly agree[ ] b. Strongly disagree[ ] c. Agree[ ] d. Disagree[ ]

60