CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Financial reports provides an overview of a business profitability
and financial condition in both short and long term. They are necessary
sources of accounting information about companies for wide variety of
users. In. every business, there, needs information. This information
needs ranges from financial, production, marketing etc. Generally, the
larger the organization the greater the management need for
information. Financial report plays a vital role in decision making process
of business organizations. The main purpose of financial repots is the
provision of financial information as a record making. It has been said
that accounting is the language of business. It might also be said that
the ability to apply accounting knowledge is critical to success in
business: A business prepares various report at the end of each fiscal
period. This report summarizes the changes that have taken place
during the period. For this financial report to be useful, the data be
presented in such a way that the user will recognize, Similarities,
differences and trends form one period to another to enable them make
decisions. The accounting information contained in the financial reports
enables management to make more inform decisions. Financial report
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should provide adequate information in all areas of organization and
economic activities; it should be able to disclose clearly the nature and
accurate accounts of the transactions fun which the true and fair view
financial position of the organization can be ascertained. Financial
reports serve a lot of useful purpose to different users namely,
shareholders, Creditors, Banks, government agents, employees,
potential investors and the management of the entity it self. The above
identified groups of persons rely on the information supplied by the
given firm through financial reporting in which they have interest to
ascertain the organization‟s state of affairs which serves as an important
guide in deciding the extent to which they commit their fund. It is the
“communication of financial information useful for decision making such
as investment, credit and other business decisions” such communication
include, general. Purpose financial statement, balance sheet, equity
report, cash flow reports and notes to these statements.
1.2 STATEMENT OF THE PROBLEM
The problem of this research is that, the management does not know
the various ways of presenting financial accounting reporting, which
often affects managerial decision making. There are no proper allocation
of resources of the organization which leads to non-achievement of the
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profit maximization objective. Also the inability of the management to
recruit trained and professional personnel, as a result, the quality of the
decision made by this organization are very poor.
1.3 OBJECTIVE OF THE STUDY
The research work covers the effect of financial accounting
reporting on managerial decision making.
The studies have the following objectives:
To know whether the various ways of presenting financial accounting
reporting have any effect on managerial decision making in the
company.
To examine the attitude of management in the allocation of resources
which often leads to achievement of profit maximization objective.
To determine the level of which management recruit trained and
professional personnel which leads to quality decision making.
1.4 RESEARCH QUESTIONS
Based on the objectives, the following research questions were
developed:
Does the various ways of presenting financial accounting reporting have
any effect on managerial decision making of the company?
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What are the attitude of management in the allocation of resources
which often leads to profit maximization objective?
To what extent does management recruit trained and professional
personnel which leads to quality decision making?
1.5 STATEMENT OF HYPOTHESIS
Because of the above research questions, the following hypotheses were
formulated.
HYPOTHESES 1
HO: The various ways of presenting financial accounting reporting does
not have effect on managerial decision making of the company.
HI: The various ways of presenting financial accounting reporting have
effect on managerial making of the company.
HYPOTHESIS 2
HO: There are no proper allocation of management resources which
often leads to profit maximization objective.
HI: There are proper allocation of management resources which often
leads to profit to profit maximization objective.
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HYPOTHESIS 3
HO: Management does not recruit trained and professional personnel
which leads to quality decision making.
HI: Management recruit trained and professional personnel which leads
to quality decision making.
1.6 SIGNIFICANCE OF THE STUDY
The significance of this study is that, it shows the effect of financial
reports in the operation of the organization. This research is beneficial to
internal and external users of financial report. The financial of this
research will help managers determine the method of financial needs
that will help in realization of their corporate objectives. The study will
help the management to know the experts (accountants) that will be
able to prepare an annual report that will enable the management to
make well-informed decision that will enhance profit maximization. It will
enable the external users to know whether the organization is making
profit in coder to invest more. Thi0s study will also serve us resource
material for other researchers for further research in related areas.
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1.7 SCOPE AND LIMITATION OF THE STUDY
The research work covered the whole of Enugu State manufacturing
companies, but due to certain constraints the research is restricted to
Nigeria Bottling Company PLC. Thus, the research investigate the effect
of using financial reports in making management decisions.
The limitation of this study is the time factor. Since the researcher
carried out the research of the same time with her studies, there was
limited time for to cover all the necessary areas of the research study.
And also lack of audience from the despondence.
1.8 DEFINITION OF TERMS
ANNUAL REPORT: this is a comprehensive report on a company‟s
activities throughout the preceding year. Annual reports are intended to
give shareholders and interested people information about the
company‟s activities and financial performance.
MANAGERIAL DECISION: This is the decision concerning the
operating of the firm, such as the choice of the firm size, firm growth
rate, and employment.
INFORMATION: This can be seen as data which have been processed
into a form meaningful to the recipient (receiver)
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ORGANIZATION: Is an organized body of people working together for
the pursuit of a particular purpose (s) called organization goals.
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REFERENCES
Igben, R. (2009). Financial accounting made simple, Lagos: Roi publication.
William, L. (2008). An introduction to financial management. London: McGraw
–Hill Publication.
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