ABSTRACT

Accounting  information provided by means of financial statement (The Income statement and the balance Sheet) are often in summarized form. Viewed on the stir lace,about [lie results and the financial position of a E)USi1ICSS hidden Ill tl)cnl ru na in veiled. lo I)C of ol)timllal l)eJlCf it and as well enable the users make knowledgeable decisions, financial statements need to be analyzed by means of ratios (which posses several important features like helping to reveal, compare and uitcrprct s:ilient fi.atures of financial statements. When applied to a set of financial statenietits, fiuiaticial ratios higlil ight significant aspects of the financial position and opera iomia I results of a business requiring further investigation. They help to ideiltif' the strengths and weaknesses of a business.). The objective of the research is to show how rat to analysis facilitates proper understanding of information contained in financial statements. To show how ratio analysis aids business decisions, lliercfore, in order to establish the credibility of ratio analysis in analyzing business decisions, this research is calTied out, using Nestle Nigeria Plc a the Case study. 'l'he researcher made use of both primary and secondary sources of data collection. liowever, fr the former, questionnaires were administered, whereas ibr the later, relevant data were received. The data Collected via the primary data sources were analyzed using correlation coefficient. After which analysis conducted on the chapter four, was based at 95% level of confidence (5% level of sii.nI cance) using a two-tailed test. While the researcher recommended that financial ratios should be used with careful examination and proper umiderstamid ing of time meaning, iuipl ication and effect of the actual figures shown in financial stateillemlts, in order to avoid making wrong judgments, conclusions and decision. Finally, it was established that ratios analysis heightens business (Icc is io ii - Iii a k 111g.