THE USE OP FINANCIAL RATIOS IN THE EVALUATION OP CORPORATE PERFORMANCE: A CASE STUDY OF TWO SELECTED TEXTILE COMPANIES IN KADUNA
THE USE OP FINANCIAL RATIOS IN THE EVALUATION OP CORPORATE PERFORMANCE: A CASE STUDY OF TWO SELECTED TEXTILE COMPANIES IN KADUNA
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Date
1995-07
Authors
OKOLIKO, ICHADO REUBEN
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Abstract
(vi)
ABSTRACT
This project deals with the analysis of results of Arewa
Textiles Plc and United Nigerian Textiles Plc (consolidated) all in
Kaduna, over a period of five years (1987-1991). A total number of
14 (fourteen) ratios were used to analyse their performances over the
said period.
The current ratio for the two companies falls below the
traditional standard of 2:1. On the whole, Arewa Textiles Plc has
better performance over the five years.
The Acid test ratio for the two companies also falls below
the ideal situation of 1:1. However, the result of United Nigerian
Textiles Plc (consolidated) is better off over the period under review.
The debt ratios for the two companies fluctuated with United
Nigerian Textiles Plc (consolidated) having higher ratios in the first
two years.
United Nigerian Textiles Plc (consolidated) also has higher
stock turnover ratios over the years than Arewa Textiles Plc. On the
other hand, Arewa Textiles Plc has shorter average collection period.
The profitability ratios also indicate that United Nigerian
Textiles Plc (consolidated) has higher return on capital employed in
the first two oyears while Arewa Textiles moved higher in the last
three years.
The profit margin on sales also shows that United Nigerian
Textiles Plc has better result in the first four years. However, the
Return on Total Assets for Arewa Textiles are higher in the first three
(vii)
years and year five. The Return on Equity for United Nigerian
Textiles Plc is higher in the first two years while Arewa Textiles
has higher returns in the last three years.
The Earnings Per Share ratio shows higher returns for Arewa
Textiles over the five years. The dividend per share for Arewa
Textiles Plc is also greater in the first three years and year five.
Having identified the difficulties and shortcomings depicted
by the above ratios, a number of recommendations are therefore
outlined to rectify their poor financial positions.
Description
A Project submitted to the Post-Graduate School,
Ahmadu Bello University, Zaria
in Partial Fulfilment of the Requirements for
the Degree of Masters of Business Administration.
Keywords
FINANCIAL,, RATIOS,, EVALUATION,, CORPORATE,, PERFORMANCE,, CASE,, STUDY,, SELECTED,, TEXTILE,, COMPANIES,, KADUNA.