ABSTRACT
Investment decision is one of the important decisions a firm takes to ensure its continuity and this decision cannot be taken without information provided by the financial statements. Finanpcial ratios are one of the information extracted from the financial statements which can be used for decision making in a firm. The main objective of this study was to determine the effect of financial ratios on investment decisions of firms in Nigeria with particular reference to Nigeria Breweries PLC. The study extracted its data through the use of secondary data extracted from the audited annual reports of Nigeria Breweries PLC from 2007 to 2016. The data collected was analyzed using simple regression method of data analysis to the level of financial ratios has on investment decision of firms in Nigeria. The findings revealed that there exists a significant influence of financial ratios such as Return on assets and 'Return on equity on the acquisition of fixed assets. Based on the findings, the study concludes that there is a positive and significant relationship between financial ratios and investment decision of firms in Nigeria and therefore recommends that firms should adhere to subjecting their financial statements to statutory audit as a way of authenticating their contents since financial ratios are extracted from them. The study also recommends that companies should ensure that no investment decision should be made without the consideration of financial information like the financial ratios as there must be a bedrock for making decisions.
Cover page
Title page 11
Declaration lll
Certification lV
Dedication v
Acknowledgements Vl
Table of contents
List of tables x
Abstract Xl
CHAPTER ONE: INTRODUCTION
1.1 Background to the study 1
1.2 Statement of problems 3
1.3 Objectives of study 4
1.4 Research questions \ 4
1.5 Research Hypothesis 5
1.6 Significance of the study 5
1. 7 Scope of the study 5
1.8 Limitations of the study 6
CHAPTER TWO: LITERATURE REVIEW
2.1 Conceptual framework 7
2.1.1 Concept of financial ratios 7
2.1.2 Importance of financial ratios. 10
2.1.3 Users of financial ratios 10
2.1.3 .1 Internal users 11
2.1.3 .2 External users 12
2.1.4 Reliability of financial ratios 13
2.1.5 Limitations of financial ratios 13
2.1.6 Computation of financial ratios 15
2.1. 7 Explanation of selected ratios 16
2.1.7.1 Investment or stock market ratios 16
2.1. 7 .2 Activity ratio 17
2.1. 7.3 Liquidity ratios 18
2.1.7.4 Leverage ratios 19
2.1.7.5 Profitability ratios 19
2.2 Theoretical review 20
2.2. l Modem portfolio theory 21
2.2.2 DuPont Mean- Variance of Portfolio Investment Theory 22
2.2.3 Proprietary and residual equity theory 23
2.2.4 Entity theory and enterprise or social theory 24
2.2.5 Theories of Rational and Adaptive Expectation 25
2.2.6 Risk Propensity or Perception Theory 26
2.2.7 Keynes's Liquidity Preference Theory 27
2.3 Empirical review 28
CHAPTER THREE: RESEARCH METHODOLOGY
3 .1 Research design 30
3 .2 Area of the study 30
3.3 Method of data collection 30
3 .4 Validity and Reliability of instrument 30
3.5 Method of Data Analysis 31
3. 5 .1 Model specification and operational definition of variables 31
CHAPTER FOUR: DATA PRESENTATION, ANALYSIS, AND DISCUSSION OF RESULTS
4.1 Data presentation 33
4.2 Analysis and Discussion of finding on Hypothesis one 33
4.3 Analysis and discussion of finding on hypothesis two 36
4.3 Analysis and discussion of finding on hypothesis three 38
4.4 Test of Hypothesis 39
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of findings 42
5.2 Conclusion 42
5.3 Recommendation 43
REFERENCES 45
APPENDIX
CHIJIOKE, A (2020). Analysis Of Financial Ratio On Investment Decision Of Firms In Nigeria (A Study Of Nigerian Breweries Plc 2007-2016). Mouau.afribary.org: Retrieved Nov 24, 2024, from https://repository.mouau.edu.ng/work/view/analysis-of-financial-ratio-on-investment-decision-of-firms-in-nigeria-a-study-of-nigerian-breweries-plc-2007-2016
ACC/14/21811, CHIJIOKE. "Analysis Of Financial Ratio On Investment Decision Of Firms In Nigeria (A Study Of Nigerian Breweries Plc 2007-2016)" Mouau.afribary.org. Mouau.afribary.org, 13 May. 2020, https://repository.mouau.edu.ng/work/view/analysis-of-financial-ratio-on-investment-decision-of-firms-in-nigeria-a-study-of-nigerian-breweries-plc-2007-2016. Accessed 24 Nov. 2024.
ACC/14/21811, CHIJIOKE. "Analysis Of Financial Ratio On Investment Decision Of Firms In Nigeria (A Study Of Nigerian Breweries Plc 2007-2016)". Mouau.afribary.org, Mouau.afribary.org, 13 May. 2020. Web. 24 Nov. 2024. < https://repository.mouau.edu.ng/work/view/analysis-of-financial-ratio-on-investment-decision-of-firms-in-nigeria-a-study-of-nigerian-breweries-plc-2007-2016 >.
ACC/14/21811, CHIJIOKE. "Analysis Of Financial Ratio On Investment Decision Of Firms In Nigeria (A Study Of Nigerian Breweries Plc 2007-2016)" Mouau.afribary.org (2020). Accessed 24 Nov. 2024. https://repository.mouau.edu.ng/work/view/analysis-of-financial-ratio-on-investment-decision-of-firms-in-nigeria-a-study-of-nigerian-breweries-plc-2007-2016