ABSTRACT

The effect of financial ratios on financial performance of firms in Nigeria was studies to

ascertain it impact on profit after tax and return on assets of Uniliver, Nigerian Breweries.

Nestle Nigerian Plc and PZ for a period of five years. This study adopted the multiple

regression data analytical techniques using secondary data extracted from annual reports

of selected quoted firms in Nigeria from 2011 to 2015. The variables in this study were

current ratio and inventory turnover which was used to represent financial ratios while

profit after tax and return on assets were used as proxies for financial performance. From

the results of the. analysis, financial ratios had significant effect on profit after tax of

selected firms, this was seen from the adjusted R squares of .187 which clarifies that 1 8.7%

of the total variation on profit after tax was explained by financial ratios. The multiple

regression analysis between financial ratio and return on assets of the selected trms

indicates that there is no significant relationship or change in the average value of return

on asset on per unit change in the financial ratio. Therefore, from this study. . inventory

turnover has a negative significant effect on the financial ratio, but had no signiflcant

relation on the return on asset. Financial ratio had a significant effect on the return of assets

on firms which was explained from the F statistic with value of 3.458 hence concluding

that there is significant effect of financial ratios on return on assets of firms. Based on the

findings from the study, management of various firms should ensure that decisions made

by them in respect to financial management should revolve on profit maximization.

managers should employ financial leverage in such a way that it will increase return on

asset.