ABSTRACT

The project topic is "THE USE OF ACCOUNTING RATIOS AS A TOOL FOR EVALUATING CORPORATE FINANCIAL PERFORMA NCE' There has always been these arguments, disagreement and mistrust between the owners and the managers of business ventures over the credibility of the financial statement reported. The fears of the investors stem from the fact that the reports could contain: Frauds, Errors and Mistake; could deliberately be misleading just to misinform and deceive. And it may not reveal mismanagement, fraud or loss. This problem was what gave rise for the search and adoption of techniques that will be more acceptable to all in the evaluation of corporate performance. By way of literature review, the need for stewardship accounting and the use of generally accepted techniques for evaluating and interpreting financial statement by different users were traced as well as definitions of basic accounting concepts, formulae were xrayed. Various authors' views on the subject were also reviewed and stated holistically. The study used both primary data — which were in the form of structured questionnaires, personal interviews & observations, and secondary data gotten from textbooks, Journals Magazines and unpublished materials. The population size was 252 drawn out of which the sample size of 155 was drawn using: TARO YAMEN'S formula. Researcher's findings showed that most firms use accounting ratios extensively in evaluating operational efficiency. It revealed also that business concerns made use of accounting extensively ratios for management decision making process and comparison. It is recommended that business unit in a particular industry should adopt a common set of parameters for assessing that particular industry e.g. banking industry, manufacturing etc for ease of common interpretation as no one ratio tells it all. Further research work should be conducted on inter-company comparison ratio as a means of harmonizing and identifying operational opportunities open and common to all the participating firms.