CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND OF THE STUDY

       since the formulization of the separation of management from ownership of the public limited liability companies, there is the need for a formalized way of reporting to the owners of the business, on how efficient has the management utilize the share holders funds over a specified period, hence the financial statement.

       Financial statement is a combination of income statement and balance sheet of the reporting entity at a particular point in time. Having a financial statement prepared does not really tell how the business has faired in the recent time, but subjection of the result to various analysis and interpretation.

       For any organization to start with generally, it needs the fulfillment of many requirement of the law according to the nation of origin. In Nigeria the requirement to start a company requires that the promoter must meet some laid down requirement ie adequacy of capital, number of the directors and secretary, power of the company, the power of board of Directors and these must be documented and registered with the corporate affairs commission (CAC) in Abuja.

       The requirement for operations apart from the normal expenses of day to day running of the business, the organization is expected to fill an annual return to the corporate affairs commission (CAC). The first is after the six months of commencement of business called statutory report and subsequently a yearly report called annual report of financial statement.

1.2  STATEMENT OF PROBLEM

The second point of filing report, sound interesting in public liability company’s Via investment decision base on financial report of the company. The investing company public seldom invest in such company based on the report most investing public who are individual, even highly educated individual seldom patronize their accountant or management consult or brokers, seeking to invest in Nigeria companies based on their reported past performance. That is why the researcher bases his hypothesis on financial statement.

       A guide to investment decision has contributed to shape the structure of Nigeria economy.

1.3 OBJECTIVE OF THE STUDY

a.    To makes appropriate recommendation based on findings and conclusion.

b.    To determine the usefulness of financial statement in guiding investment decision in Nigeria.

c.    To review the relevant investment policies put in place by government and how they have aided investment decision.

d.    To determine what extent has the financial statement been use in investment decision.

1.4  SIGNIFICANCE OF THE STUDY

The researcher study will among other things provided valuable information which will be useful to the research to add to this knowledge, other researchers as a basis of reference as well as business people who deals in financial/capital market.

The study will also educate the various categories of the people stated above on the financial statement and how risk could be managed using various strategies available to improve the Nigeria economy.

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