FINANCIAL RATIO ANALYSIS AS A TOOL FOR MEASURING PERFORMANCE IN AN INDUSTRY

ABSTRACT

This study investigated financial ratio as a tool for measuring performance in an industry with specific focus on Nigerian Breweries Plc and Guinness Nigeria Plc. Six objectives were stated from chapter one and several literatures were reviewed in the second chapter. Informed by the six objectives stated, four hypotheses were formulated and tested at 5% level of significance. Secondary data were obtained from the annual reports of the selected companies spanning 2009-2014. Sample tables were used to present the data, while t-test of difference in means was employed to test the formulated hypotheses. Findings revealed that financial ratios can be used to assess profitability of an industry and that the liquidity and gearing status of Nigerian Breweries Plc and Guinness Nigeria Plc are statistically the same. Based on those findings, it can be concluded that the liquidity, profitability, gearing and investment position of Nigerian Breweries Plc can stand a good test of time to keep the company alive and running. It was recommended inter alia that financial ratio figures should be investigated and compared with the values of previous periods and budgeted figure for the year so that changes can be discovered and a higher returns can be achieved in their present and future planned operations.