CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Corporate managers are responsible for acquiring physical and financial resources
from an organization’s environment, whether internal or external, and using them to create
value for the organization’s stakeholder. Value is created when the organization earns a
return on its investment more than the cost of capital employed. Managers have to plan,
develop, measure, and control business strategies to achieve this goal, which they implement
through business activities (Hill B, 2018). An organization’s business activities are
influenced by its business strategy and economic environment. Manager then employ
qualitative and or quantitative measure, to evaluate the efficiency and effectiveness of the
business activities, in-line with the value creation goal of the organization. These qualitative
and quantitative measure, also called Performance measurement, serves to generate workable
information about financial and non-financial outcomes of the business activities, in
monetary units, for an organization.

Performance measurement is about monitoring the predetermined goals or

stakeholder’s requirements, before, during and after implementation, in actuals (i.e., historic)
and forecasts. Performance measurement is a very important aspect of business activities as
the purpose of measuring performance is not only to know how a business is performing but
also to enable that businesses perform better in their quest to create value, either by gaining
market share or maintaining current share. Horngren, Datar and Foster (2006) notes that
many organizations present performance measures for their businesses in a single report
called Balance Scorecard. While, different Organizations stress different measures in their
Balanced Scorecards, the measures are always derived from a company’s strategy.

Kenny and Meaton (2007) also notes that the different frameworks for measuring
business performance have evolved from a variety of origins. These frameworks are
approaches to measurement that business have frequently adopted, often with significant
diversity in their design and use.

The approaches are:

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 A. Balanced Scorecard
B. Economic Value Added
C. Activity-Based Costing
D. Quality Management

E. Customer Value Analysis

F. Action-Profit Linkage Model

The Balance Scorecard as been the most used business performance measurement as
it translates an organization’s mission and strategy into a set of performance measures that
provides the framework for implementing its strategy. It does not focus solely on achieving
financial objectives, it also highlights the non-financial objectives that an organization must
achieve to meet its financial objectives (Alistair C, 2008). The four perspectives are:

A. Financial Perspective (How do we look to shareholders?)

B. Customer perspective (How do customers see us?)

C. Internal business perspective (What must we excel at?)

D. Learning and growth perspective (Can we continue to improve and create value?)

Since performance measures are often used for evaluation, they serve as an indicator
of the organization’s long-term sustainability. They are very crucial as they serve as a tool of
financial management, a major objective of a business organization, and a mechanism for
motivation and control within an organization.

Managers leverage on their business environment (labour market, capital market,

product market) and business strategy (scope of business, competitive positioning, key
success and risk factor) to carry out their operating, investing and financing business
activities. The economic consequences of their business activities are then measured,
recorded and reported based on their accounting environment (capital market structure,
contracting and governance, tax and legal system) and accounting strategy (Choice of
accounting policy, accounting estimates, reporting format and supplementary disclosures) in
documents called financial statement. (Fabozzi and Peterson, 2003) The purpose of preparing
the financial statements of an organization is to convey summarized information on the
overall performance and the state of affairs of such an organization to all interested parties, in
monetary and non-monetary units. Because the organization’s business activities at any time

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period are too numerous to be reported individually to outsiders and some of the activities
undertaken by the organization are proprietary in nature, and disclosing these in details could
be a detriment to the organization’s competitive position, external users of the organization’s
financial statements then consume information from the financial statements in such a way as
to reveal the strengths and weaknesses of the organization, in order to form an opinion as
regard her going-concern. They use a combination of ratios and metrics in their discovery
attempt.

Ratio analysis is an approach of evaluation used by managers, and external users

(usually Analysts) alike, to compare a company’s financial structure, conditions and
performances with standards prevailing in such industry for the purpose of high-lighting
improvement or deterioration in the trend of the business performance. Lucey (1988) defined
ratio analysis as the systematic products of ratios from both internal and external financial
reports so as to summarize key relationships and results in order to appraise financial
performance. Financial ratios are tools used to analyze financial conditions and performance.
Financial analysis means different things to different people. Trade creditors are primarily
interested in the liquidity of the organization being analyzed. Their claims are short term and
the ability of the organization to pay these can best be judged by an analysis of its liquidity.

On the other hands, the claims of bondholders are long term. They are interested in
the cash flow of the organization to service debts over a long period of time. The bondholders
may evaluate this by analyzing the capital structures of the organization, the major sources
and users of fund, the organization’s profitability. Finally, an investor in an organization’s
common stock is concerned principally with present and expected future earning as well as
the stability of these earning about a trend. As a result, the investor usually concentrates on
analyzing the profitability of the organization through financial ratios.

Fabozzi and Peterson (2003), added that the point of view of the user (the analyst)
may be either external or internal. For external, it involves suppliers of capital while that of
internal, the organization needs to undertake financial analysis in order to plan and control
effectively. To plan for future, the financial manager must assess the organization’s financial
position and evaluate opportunities in relation to their effects on this position. With internal
control, the Managers are particularly concerned with return on investment in the various
assets of the organization and in the efficiency of asset management.
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 Financial analysis involves the use of financial statement. These statement attempts to
several things. They portray the assets and liabilities of a business organization at a moment
in time usually at the end of a year. The financial statement usually contain an income
statement or comprehensive profit and loss account, which involves the revenue, expenses,
taxes and profit of the organization at a particular period of time usually one year and arrives
at it profitability over time, the balance sheet that represents a snapshot of the organization’s
statement of assets and liabilities at a moment in time and the statement of cash flows, which
depicts the operating, investing and financing activities of a business at a particular time.. To
evaluate an organization’s financial condition and performance, analysis and interpretation of
various ratios should be given to experienced and skilled analyst who analyze by broad
methods (Karwowski, 2015).

The analysis of financial ratios involves two broad methods of comparison. The First,
Internal Comparison; where the analyst compares a present ratio with past ratio of the same
company. The second method of comparison involves comparing the ratio of one
organization with those of similar organization within its industry (this type of comparisons is
sometimes said to be “Finding the Industry average”). This comparison gives relative insight
into the conditions and current performance within an industry.

The study makes use of financial ratio analysis to compare the financial performance
of selected publicly listed companies in the Alcoholic beverage industry, in Nigeria. To
accomplish this, more than thirty-five financial ratios are used in this analysis, grouped into
six major headings, which are categories that the determinant of company’s performance
have been made. These categories are mainly endogenous and exogenous factors. The
endogenous factors are those firm specific factors that result from the decision and policies of
management. Hence, efficiency, profitability, liquidity, capital structure, and asset quality
ratios are among the endogenous factors. On the other hand, market concentration,
ownership, and other macroeconomic factors such as economic growth and inflation are
classified as exogenous factors.

1.2 STATEMENT OF THE PROBLEMS

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 Owing to the existence of very limited literature in the subject matter on Nigerian
based organizations and inspired by ratio analysis, I explored the performance among
selected companies in Nigeria. The project used five years of secondary data in the industry
so as to systematically analyze the effects of organizational efficiency.

Many financial and accounting models were developed and have changed during the
past decades; however, the financial ratios have retained their standard and vital ability to
accurately measure the performance of any organization, either as part of these financial and
accounting models or as a standalone supportive analysis tool. While in time past, skilled
professional, Analyst, where consulted to perform analysis and measures on the performance
of organizations and they usually give their report through their various assets management
or investment firms, but in recent times and the days upon us, performance measurement
needs to be an important skill for the average investor, so that they can quickly assess and
corroborate the reports of Analysts.

Also, a lot of investors use the cash dividends and interest paid on their investment,
while some use the decisions and opinions of other investor; without properly verifying for
themselves, as a tools in evaluating the performance of companies for investment decision.
These parameters do not give accurate information about the performance and efficiency in
operation of the companies. Some managers do not employ financial ratios in performance
appraisal and in the evaluation of investment decision because of the technicalities involved
in financial ratio analysis, fear of assessment and inexperience. Therefore, they employ the
services of stockbrokers and other investment professionals, which may come at a substantial
cost of profit reduction.

As the world evolves and globalization and economic events thins out the border lines
in professions, it is important that every investor be able to perform on-the-go analysis for
better investment decision, and as mind-blowing opportunities emerge, as observed in the
crypto world, they need to be able to corroborate the efforts and fully understand the analysis
of professional investment managers.

It is to this end, that this research plans to educate on, as it examines, the importance
or usefulness of financial ratios in evaluating the performance of organizations for quality
investment decision.

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1.3 OBJECTIVES OF THE STUDY
1.3.1 Broad Objective:
The broad objective of the study is to measure the performance of companies in the Alcoholic
beverage Industry in Nigeria.

To utilize existing theories and methods in the development of a procedure that will enable
comparative analysis of the selected companies.

To critically analyze the financial statement and evaluate the performance of the companies
through financial ratios in order to ascertain whether resources are optimally and efficiently
utilized.

To analyze how financial ratio can assist management and investors in detecting the various
strengths and weakness of an organization.

1.3.2 Specific Objectives:

Specific objectives of these study are:
i. To identify the key industry performance.
ii. What is the performance of the companies in relation to liquidity ratios?
iii. What is the performance of the companies in relation to asset management
ratios?
iv. What is the performance of the companies in relation to profitability
ratios?
v. What is the performance of the companies in relation to market value
ratios?
vi. What is the performance of the companies in relation to debt management
ratios?
vii. Which company performs best in the industry?
viii.
ix. To measure the significance level of performance drivers in Nigeria Alcoholic
beverage Industry.

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 x. To examine the performance of publicly listed companies in the industry above by
rating each company, in multi -dimensional ways.

1.4 RESEARCH QUESTIONS

In line with the research problems and objectives, this work through the actual analysis of the
financial statements of the five companies earlier stated sets to answer the following
question:

A. What is the performance of the companies in relation to liquidity ratios?

B. What is the performance of the companies in relation to asset management
ratios?
C. What is the performance of the companies in relation to profitability
ratios?
D. What is the performance of the companies in relation to market value
ratios?
E. What is the performance of the companies in relation to debt management
ratios?
F. Which company performs best in the industry?

1.5 SCOPE AND LIMITATIONS OF THE STUDY

The study is going to use the data from the Annual report of five publicly traded companies
in the Alcoholic beverage industry in Nigeria. The companies are Guinness Nigeria Plc.,
International Breweries Plc., Nigerian Breweries Plc., and Champion Breweries Plc., and
Golden Guinea Breweries Plc. The Annual report are within the years 2016-2020 and are
gotten from the individual investors relations page of the companies and verified against the
Annual reports upload on the database of Nigerian Exchange.

Also, this study is limited to the measure of performance of the companies above by applying
financial ratio analysis only to the data from their individual financial reports.

1.6 SINGIFICANCE AND RELEVANCE OF THE STUDY

This study will be very important to the following:

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 A. Prospective and Existing Investors: It will enable them determine risks of investment
in the above mentioned and similar companies i.e., they are exposed to the financial
position of the companies thereby aiding their analysis of the performance of the
companies towards making profitable investment decisions or withdrawing from
unprofitable investment
B. Management of Companies: It provides the tool for assessing or evaluating the
company’s performance and also taking decision as to where to improve upon.
C. Relevant Regulatory Bodies: It helps the relevant regulatory bodies to quickly assess
this work rather than go through analysis from the beginning.
D. Staffs of The Companies: Staffs of the companies analyzed can now understand how
their different inputs affect the Organization in profitability and rating. This work
bring makes their efforts clearer than the financial statements which they usually
don’t understand.
E. Other Researchers: This work can be used as a spring board for other advanced
researchers

1.7 OPERATIONAL DEFINITION OF COMMON TERMS

Since all the terms used in this research work cannot possibly the defined herein, some of the
common terms are defined and explained below, while other are defined and discussed in this
project. The terms defined are:
- Asset: Economic resources owned by a business, which are expected to benefit future
operation. It is divided into two:
A. Fixed (Non-current) Assets; which are assets that are expected to be collected in
cash or sold or consumed in longer than one year e.g., building, Equipment etc.
B. Current Assets; which are cash plus assets that are expected to be collected in
cash or sold or consumed within one year or as a part of the company’s normal
operating cycle e.g., Cash stock prepaid expenses, cash at hand, inventories etc.
- Liabilities: These are debts or obligations of a business organization. They are the claims
of creditors against the asset of a business e.g., Creditors, bank overdraft. Liabilities, like
assets, are divided in two:
A. Fixed (Non-current) Liabilities; which are liabilities that are expected to be
settled in cash or sold or consumed in longer than one year e.g., senior secured
debt, Equipment etc.

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 B. Current Liabilities; which are liabilities that are expected to be settled in cash or
sold or consumed within the one year e.g., cash at hand, inventories etc.
- Dividend: A distribution of cash agreed upon by management of the board of directors of
a company to its stockholders as an incentive for investing and holding shares of the
company.
- Balance Sheet: a financial statement that reports a company's assets, liabilities, and
shareholder equity at a specific point in time.
- Income Statement / Profit and Loss Account: It’s one of the three important financial
statements used for reporting a company's financial performance over a specific
accounting period. Also known as the profit and loss statement or the statement of
revenue and expense, the income statement primarily focuses on the company’s revenues
and expenses during a particular period.
- Statement of Cash Flows: It’s a financial statement that summarizes the amount of cash
and cash equivalents entering and leaving a company. Like the income statement, it also
measures the performance of a company over a period of time. However, it differs
because it is not as easily manipulated by the timing of non-cash transactions.
- Leverage Ratio: It’s any one of several financial measurements that look at how
much capital comes in the form of debt (loans) or assesses the ability of a company to
meet its financial obligations.
- Working Capital: It’s the difference between a company’s current assets and its current
liabilities. It measures a company’s liquidity, operational efficiency, and short-term
financial health.
- Securities: These are financial asset of a company, which are sold to investors, which
could attract returns or benefit on investment. Example are stocks, bonus etc.
- Liquidity: This is state of posing liquid asset such as cash and other assets that will soon
be converted into cash.
- Comparative Financial Statement: Presenting the same company’s financial statements
analysis for two or more successive period in side-by-side column.
- Horizontal Analysis: Analysis of a company’s financial statements for two or more
successive period showing percentage and or absolute changes from previous year. The
type of analysis helps detect changes in a company’s performance and highlight trend.
- Vertical Analysis: This type of analysis is the study of a single years’ financial statement
in which each line items are expressed as a percentage of significant total. 

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- Periodicity: An assumption that an entity’s life can be subdivided into time periods such
as months or years.
- Profitability: Ability to generate income
- Solvency: Ability to pay debts as at when they become due.
- Transaction: Record able happening or event that affect assets, liabilities stock holder’s
equity revenue or expenses of an entity.

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REFERENCE

Alistair Craven. An Interview with Robert Kaplan & David Norton (Emerald Publishing,
2008).

http://www.emeraldgrouppublishing.com/learning/management_thinking/interviews/kapl
an_norton.htm

Fabozzi, F.J and Peterson, (2003), “Financial Management and Analysis”, Second Edition, S.
l,
John Wiley and Sons, Inc.

Hill, B. “The Importance of Planning in an Organization”, Business Planning & Strategy

Newsletter, https://smallbusiness.chron.com/importance-planning-organization-
1137.html, Updated February 12, 2019

Horngren, C. T., Datar, S. M., and Foster G. (2006). Cost Accounting: A Management
Emphasis, New Jersey: Pearson Prentice Hall.

Karwowski, M. 2015. Accounting and Financial Reporting. Warsaw School of Economics.

Warsaw.

Kenny, B. and Meaton, J. 2007. Cross-benchmarking international competitiveness and

performance in human language technologies. Benchmarking: An International
Journal,
14, 5, pp. 594-608. Emerald Group Publishing Limited. Bingley.

Lucey, T. (1988), Management Accounting, DP Publications Ltd. London. Retrieved from:

https://journals.scholarpublishing.org/index.php/ASSRJ/article/download/572/pdf_20/20 87,
November 2021.

Murphy, B. “Financial Statements”, How to Value a company Article, Reviewed by Margaret

James, https://www.investopedia.com/terms/f/financial-statements.asp, Updated
September 09, 2020

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12
 CHAPTER TWO

LITERATURE REVIEW THEORTICAL FRAMEWORK

2.1 THEORETICAL FRAMEWORK

Numerous researches abound on the subjects of financial ratio analysis and performance
measure, some of which are reviewed in this chapter. To understanding the use of various
financial ratios and techniques can help in gaining a more complete picture of a company's
financial outlook. The following reviews were made on some previous research works.

Financial ratio shows the relationship between two or more financial or statistical data in a
financial statement or management account (Aborode, 2005). Gavtam (2005), asserts that
ratio analysis is a process of determining and interpreting the relationship between the items
of financial statement to provide a useful understanding of the performance, solvency and
profitability of an enterprise. More so, for ratio to be useful in investment decision, it must be
compared with earlier periods of trends with similar organizations in the industry to
determine strengths and weaknesses, compared with the industrial average. Financial ratio
may be expressed as a percentage or in relation to another figure or group of figures or line
items in the same financial statement. The needs of accounting information users are not
normally the same. This depends largely on the type of users and the purpose for which the
information is to be used. The concept for using financial ratios as a tool to measuring
performance is furthered explained.

2.1.1 THE CONCEPT OF PERFORMANCE MEARSUREMENT

Neely et al (2000) define performance measurement as “the process of quantifying the

efficiency and effectiveness of action”, “a metric used to quantity the efficiency and/or
effectiveness action”, and the set of metrics used to quantity both the efficiency and
effectiveness of action”. They argue that the above definitions are precise but do not convey
what is being labelled in the literatures and in practice as performance measurement.
According to them, performance measurement refers to the use of a multi-dimensional set of
performance measures. The set of measures is multi-dimensional as it includes both financial
and non-financial measures that includes both internal and external measures of performance
which quantify what has been achieved as well as help predict the future.

13
Performance evaluation of a company is usually related to how well a company can use it
assets, share holder equity and liability, revenue and expenses. Financial ratio analysis is one
of the best tools of performance evaluation of any company. In order to determine the
financial position of the company and to make a judgment of how well a company is efficient
in its operation and management and how well the company has been able to utilize its assets
and earn profit different methods and/or tools are used, among which is the financial ratios.

Financial ratio can be seen as a relationship between a two individual quantitative financial
information connected with each other in some logical manner, and this connection, is
considered as a meaningful financial indicator which can be used by the different financial
information users. Brigham and Ehrhardt (2010) state that financial ratios are designed to
help evaluate financial statements. Financial ratios are used as a planning and control tool.
Financial ratios are used by internal and external financial data users in making their
economic decisions; including investing, and performance evaluation decisions. Financial
ratios analysis is used to evaluate the performance of an organization in order to determine
the strong and weak points and it offers solutions by providing appropriate plans. However, a
large number of standards and various financial ratios exist but the choice of ratios used
depends on the activity of the organization and the purpose of analysis (Tofeeq, 1997).

Behn (2003) in Wikipedia gives 8 reasons for adopting performance measurements:

A. To evaluate how well a public agency is performing.

B. To control subordinates. As manager allow some freedom in the workforce, some
measures are used to control subordinatee.
C. To budget: budgets are used as tools to improve performance.
D. To motivate: Performance measurement is used to motivate staff performance targets
may also encourage creativity in developing better ways to achieve the goal.
E. To celebrate: Performance measurement is used to commemorate accomplishment by
achieving specific goals, people gain sense of personal accomplishment and self
worth.
F. To promote: It used to validate success, justify additional resources, earn customers
and win recognition in side and outside the organization.
G. To learn – learning involves analyzing corporate performance and lastly
H. To improve-performance.

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Otley (2003) wrote on the accounting perspective of performance measurement. According to
him, accounting measures of performance have been the traditional mainstay of quantitative
approaches to organizational performance measurement. He however, added that over the
past two decades, a great deal of attention has been paid to the development and use of non-
financial measures of performance.

2.1.2 LIQUIDITY RATIO AND FIRM PERFORMANCE EVALUATION

Liquidity ratios determine the organization's ability to pay debt in short term. Liquidity
performance measures the ability to meet financial obligations as they fall due. What began
as credit concerns for the US sub-prime market developed into concerns in global credit
markets with unknown financial exposures and potential losses (ABSA, 2009). The resultant
uncertainty made financial market participants exceedingly risk averse, such that they were
unwilling to Invest in any markets or financial instruments other than 'safe havens'. This
severely reduced the levels of liquidity in the global financial markets (SARB, 2009).

Thachappilly (2009), also state that the Liquidity Ratios help Good Financial He know that a
business has high profitability, it can face short-term financial problems and its funds are
locked up in inventories and receivables not realizable for months. Any failure to meet these
can damage its reputation and creditworthiness and in extreme cases even lead to bankruptcy.
In addition, liquidity ratios are work with cash and near-cash assets of a business on one side,
and the immediate payment obligations (current liabilities) on the other side. The near-cash
assets mainly include receivables from customers and inventories of finished goods and raw
materials. Coupled with, current ratio works with all the items that go into a business'
working capital, and give a quick look at its short-term financial position. Current assets
include Cash, Cash equivalents, Marketable securities, Receivables and Inventories. Current
liabilities include Payables, Notes payable, accrued expenses and taxes, and Accrued
instalments of term debt). Current Ratio Current Assets / Current Liabilities. Similarly, Quick
ratio excludes the illiquid items from current assets and gives a better view of the business'
ability to meet its maturing liabilities. Quick Ratio = Current Assets minus (Inventories +
Prepaid expenses + Deferred income taxes + other illiquid items) / Current Liabilities. In the
final ratio under this article is cash ratio. Cash ratio excludes even receivables that can take a
long time to be converted into cash. Cash Ratio — (Cash + Cash equivalents + Marketable
Securities) / Current Liabilities.

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James (2009), Pronounce that it is the analysis of financial statements that is used to measure
company performance. If the ratios indicate poor performance, investors may be reluctant to
invest. Therefore, the current ratio or working capital ratio, measures current assets against
current liabilities. The current ratio measures the company's ability to pay back its sh01tterm
debt obligations with its current assets. Wherefore, the acid test ratio or quick ratio, measures
quick assets against current liabilities. Quick assets are considered assets that can be quickly
converted into cash. Generally, they are current assets less inventory. The current ratio is
calculated by dividing current assets by current liabilities. Current asset includes inventory,
trade debtors, advances, deposits and repayment, investment in marketable securities in short
term loan, cash and cash equivalents, and current liabilities are comprised short term banks
loan, long term loans-current portion, trade creditors liabilities for other finance etc.

2.1.3 LEVERAGE RATIO AND FIRM PERFORMANCE EVALUATION

Leverage ratio shows how efficient the organization uses other people's money and whether it
is using a lot of borrowed money (Lasher, 2005). Thachappilly (2009), in this article he gives
his opinion about debt management. He mentions that the Ratio of Debt to Equity has
Implications for return on equity debt ratios check the financial structure of the business by
comparing debt against total capital, against total assets and against owners' funds. The ratios
help check how "leveraged" a company is, and also the financial manoeuvrability of the
company in difficult times. Debt ratios and the related interest coverage ratio checks the
soundness of a company's financing policies. One the one hand, use of debt funds can
enhance returns to owners. On the other hand, high debt can mean that the company will find
it difficult to raise funds during lean periods of business (James, 2010). The ratio of these
numbers tells a lot about the business. It is calculated by taking the debt owed by the
company and divided by the owner's equity, also known as capital.

2.1.4 MARKET RATIO AND FIRM PERFORMANCE EVALUATION

Market value ratio is also call share ownership ratio. It referred to the stockholder’s way of
analyzing the present and future investment in a company. In this ratio the stockholders are
interested in the way certain variables affect the value of their holdings. It helps the
stockholder to be able to analyse the likely future market value of the stock.

16
Shanab (2008) examined the impact of returns and risks on the share prices for a sample of
38 industrial public companies in Jordan listed on Amman Security Exchange for the period
of 2000 to 2007. The results of the study showed that there is no effect for the returns, risks
and dividends on the market value per share. However, the results indicated that there is a
significant relationship between cash flow and share prices.

AL Kurdi (2005) study explored the ability of the published accounting information to
predict share prices for a representative sample of 110 Jordanian public companies listed in
Amman Security Exchange for the period of 1994 to 2004. The results informed that there is
a relationship between the published accounting information of the insurance public
companies and their share. The results also informed that market information have more
ability on predicting share prices compared to the accounting information. Hasheesh (2003),
examined the role of published accounting Information in predicting share prices. The study
used a sample of 40 Jordanian public companies listed in Amman Security Exchange for the
year 2003. The results showed that there is a positive significant positive relationship
between the market price per share with the ratios of net profits to equity, net profits to total
assets, and dividends to net profits as a total. The results showed also a significant negative
relationship between the market price per share, with the ratios of fixed assets to total assets,
the creditors total to total of cash sources, and the wages ratio to total of expenses ratio.

2.1.5 PROFITABILITY RATIO AND PERFORMANCE EVALUATION

Profitability ratios are indicators for the firm's overall efficiency. It's usually used as a
measure for earnings generated by the company during a period of time based on its level of
Revenues, assets, capital employed, net worth and earnings per share. Profitability ratios
measures earning capacity of the firm, and it is considered as an indicator for its growth,
success and control. Creditors for example, are interested in profitability ratios since this
indicate the company's capability to meet their interest obligations. Shareholders are also
interested in profitability. This indicates the progress and the rate of return on their
investments. Profitability ratio evaluate how well a company is performing by analyzing how
profit was earned relative to Revenues, total assets and net worth of companies.

James (2009), state that the Profitability Ratio Analysis of Income Statement and Balance
Sheet are used to measure company profit performance. The income statement and balance
sheet (now called Statement of Comprehensive Income and Statement of Financial Position,

17
respectively) are the two important reports that show the profit and net worth of the company.
Its analyses show how well the company is doing in terms of profits compared to Revenues.
He also shows how well the assets are performing in terms of generating revenue.

In 2009, Gopinathan in his journal titled “financial ratio analysis for performance
evaluation”, typically made sense of the massive numbers presented in company’s financial
statements. His study assessed the financial ratios that are useful for measuring the
performance of a company, so that investors can decide on whether to invest in the company.
He discussed that profitability ratios measures margins such as gross, operating, pretax and
net profits and that returns on resources employed are divided into ROA, ROE and ROCE
ratios. He gave the formulars of ROA, ROE, and ROCE as such:

A. Return on Assets, ROA, =

Net Profit
Average (Total Assets at beginning of the period + Total Assets at the close of the
period)

B. Return on Equity, ROE =

Net Profit
Average (Shareholders' Equity at the beginning of the year + Shareholders' Equity at
the close of the year)

C. Return on Capital Employed, ROCE =

Net Profit

(Average Shareholders' Equity + Average Debt Liabilities) - Debt Liabilities

Oberholzer and Van der Westhuizen (2004) investigated the efficiency and profitability of ten
banking regional offices of one of South Africa's larger banks. This study demonstrates how
conventional profitability and efficiency analyses can be used in conjunction with DEA.
Although their study concentrated on banking regions, their findings confirm those of Yeh
(1996) that DEA results as an efficiency measure have a relationship with both profitability
and efficiency ratios. The conclusions were that there are significant relationships between
conventional profitability and efficiency measures and allocated cost and scale of efficiency
had no significant relationship with technical efficiency.

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2.2 EMPIRICAL REVIEWS

Majdy, Rafat and Salah (2011) carried out a study on participation in performance
measurement systems and level of satisfaction. The aim of the study was to investigate the
use of variety of financial and non-financial performance measures identified in performance
measurement systems literature. Based on survey responses from 87 financial managers the
results indicate that performance measurement diversity is associated with the satisfaction of
performance measurement system. Hult et al (2008) in the study titled “An assessment of the
measurement of performance in international business research, examine the measurement of
performance in 96 articles published in some journals between 1995 and 2005. Their findings
reveal that most studies do not measure performance in a manner that captures the
multifaceted nature of the construct. They however offer suggestion for improving future
practice.

Bourne and Neely (2003) wrote on “implementing performance measurement system: a

literature review. The paper reviews the different performance measurement system design
processes published in the literature and creates a framework for comparing alternative
approach. It concludes that performance measurement literature was at the stage of
identifying difficulties and pitfalls to be avoided based on practitioner experience with few
published research studies.

In another study, titled “towards a definition of Business Performance Measurement System”

Franco and Santos et al (2007) review the performance measurement literature using a
systematic approach with aim of finding out different definition of performance measurement
system. In analyzing the key characteristic of a Business Performance Measurement (BPM)
system, seventeen definitions found in the literature were content analysed. This finding
suggests that the majority of researchers in this field do not explicitly define what they are
referring to when they use the phrase BPM system.

Moreover, Vince (2003) critically evaluates Business Performance Measurement: At the

cross roads of strategy, decision-making, learning and information visualization. The study
which aimed at suggesting solution to the problems experienced in implementing BPM
system, identified a set of critical success factors for BPM projects. A minimal set of four
criteria for designing successful BPM system along with 12 BPM system factors to be
considered while building BPM systems are discussed. Forty software vendors with BPM

19
related solutions are listed and the role of data visualization and metaphor is discussed as a
potential means for addressing cognitive problems with BPM systems.

In the same vein, Hofmann (2001) wrote on “Balancing Financial and Non-financial
Performance Measures” In the paper, the author analysess the incentive weights placed on
non-financial performance measures and the firm’s short-term financial return. The
consequences of a non-contractable long-term financial return and of private pre-decision
information for the incentive weight of non-financial performance measures was determined.
The analysis shows that the magnitude of the agent’s pre-decision information reduces the
incentive weights placed on non-financial signals. None of the literatures reviewed compares
the performance of companies in the same industry. This study intents to fill this gap by
comparing the financial performance of five breweries that are quoted on Nigeria Stock
Exchange.

2.3 CONCEPTUAL FRAMEWORK

The frame adopted for this work shows the steps taken to achieve the analysis of performance
measurement for the different companies selected. The steps are selection of financial report,
transfer of the financial statement, analysis proper; using financial ratios, graphical
representations the results of the ratios, comparison of results of the ratio analysis between
the five companies based on the objectives set for this work and conclusion. The steps are
further expatiated on.

The first is downloading the annual report from the investor relations page of the different
companies, and comparing it with the report uploaded on the database of the Nigerian
Exchange. This is done to verify that the reports are the same with that consumed by investor,
since all five companies are publicly listed on the Nigerian Exchange. The annual reports
used were the last five years (i.e., 2016 to 2020) reports of the companies. The exceptions to
aforementioned are:

I. Guinness Nigeria Plc., which due to difference in financial year, the years 2017 to
2021 was used; and
II. International Breweries Plc, which due to change in financial year between 2017 and
2018, there was restatement made to the report for the said years.

20
 The Second step is to transfer the financial statements from the annual reports to
Microsoft Excel package, for easy analysis, since the report downloaded were low PDF
formats, saved as such that they are easy to download. Also, the different companies design
their individual report with different colors, in respect to their brand colors, which if used
directly will make this work loose order. However, adequate care was taken so that there was
no error due to transfer.

The third step is the actual analysis. Since this work set out to measure the performance of
these companies using financial ratios, a wide, but the same, range of ratio models were used
to test these companies to different limits across board, from the individual financial
statements. The financial ratios tested are listed and explained in the later part of this chapter.

The fourth step is to represent the results of the analysis graphically. This sis done to aid
quick digestion and comprehension, and to aid and explain the comparison to be mad in the
next step. It is however worthy of note, that the third and fourth step can and may be
intertwined to make the analysis better. The different kinds of graphs to be used are, but not
limited to, make column graph, line graph, area graph, and bar graph.

The fifth step is making comparisons between the companies from the result of the analysis
model, based on the objectives set for this work, and conclusion.

21
Figure 1: Model for Ratio Analysis

22
REFERENCE

Abu Shanab, S.A, (2008), “The Impact of Returns and Risks on share prices”, An Applied
Study on Industrial Corporations listed at Amman Stock Exchange, unpublished
Doctorate Thesis, Arab Amman University For Higher Studies, Amman, Jordan,
2008.

AL Kurdi, A. (2005), “The Ability Range of Published Accounting Information on Stock

Prices
Prediction: An Applied Study on Public Shareholding Corporations on Amman
Security Exchange, unpublished Doctorate Thesis, Arab Academy for Financial and
Banking Sciences, Amman, Jordan, 2005.

Brigham, F. E., Houston, F. J. (2007). Fundamentals of Financial Management. 11 th ed. USA:

Thomson South-Western

Bourne, M. and Neely, A., (2003) “Implementing Performance Measurement Systems: A

Literature Review”. International Journal of Business Performance Management, vol.
5, No. 1. Pp. 1 – 24.

Franco-Sanktos, M., Kennerley, M., Michael, P., Martinez, V., Mason, S., Marr, B., Gray, D.,
and Neely, A. (2007) “Towards a Definition of a Business Performance Measurement
System”. International Journal of Operations and Production Management, vol. 27
(8) Pp. 784-801.

Gopinathan, T (2009) “Profitability Ratios Measure Margins and Return” (On-line):

www.allspreadsheets.com, Retrieved on 20th August, 2012).

James, C. (2009). “Accounting 101 – Income Statement: Financial Reporting and Analysis of
Profit and Loss ‟‟, Journal of income statement.

James, C. (2009). “Basic Accounting 101- Asset Turnover Ratio: Inventory, Cash, Equipment
and Accounts Receivable Analysis‟‟, Journal of asset turnover ratio.

James, H. (2010), “Long Term Debt to Equity Ratio of a Business: Understand a Company's
Value to its Investors and Owners‟‟, Journal of long-term debt to equity ratio.

23
Hofmann, C, “Balancing Financial and Non-Financial Performance Measures”, University
of Hanover, https://www.econbiz.de/archiv/h/uh/controlling/performance.pdf,
2001

Horngren, C. T., Datar, S. M., and Foster G. (2006). Cost Accounting: A Management
Emphasis, New Jersey: Pearson Prentice Hall.

Hult, G. T. M., Ketchen, D. J., Griffith, D. A., Chabowski, B. R;, Hamman, M. K., Dykes, B.
T., Pollitte, W. A., and Cavusgil, S. T. (2008) “An Assessment of the Measurement of
Performance in International Business Research”. Journal of International Business
Studies, vol. 39 Pp. 1064-080.

Lashgari, Z. & Moghaddam, R.R. (2015). Effect of Dividend Policy on Investment Decision.
Journal of applied Environmental and Biological Sciences, 5(11), 415-420.

Majdy, Z., Rafat, S., and Salah, A. (2011) “Participation in Performance Measurement
Systems and of Satisfaction”. International Journal of Business and Social
Science, Vol. 2, No. 8, Pp. 159-169.

Oberholzer, M. & Van der Westhuizen, G. (2004). An Empirical Study on Measuring

Efficiency and Profitability of Bank Regions Meditari Accountancy Research 12 (1),
pp 165–178.

Vince, K. (2003) Business Performance Measurement: At the Crossroads of Strategy,

Decision-making, Learning and Information Visualization (On-line:
www.performancemeasurement/assets/b/uewolf/article-0502. Retrieved on 22
November, 2021.

24
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 RESEARCH DESIGN

The method used in this work is quantitative analysis method. Quantitative method is used to
gain insight into the Profitability, Loan safety, ratios, Liquidity, Management Efficiency,
Debt and Market ratios by studying its financial statements such as the balance sheet and
income statement. Ratio analysis is a cornerstone of fundamental equity analysis.

3.2 DATA COLLECTION

Main data for this work are the financial statements form the annual reports of each company
measured in this study. The four financial statements used are the balance sheets, an income
statement, cash flow statement, statement of shareholder’s equity.

3.3 POPULATION SAMPLE SIZE AND TECHNIQUE OF THE STUDY

The population for this work consists of five companies in the Alcoholic Beverage Industry
in Nigeria. The companies are Guinness Nigeria Plc., International Breweries Plc., Nigerian
Breweries Plc., and Champion Breweries Plc., and Golden Guinea Breweries Plc.

The sample size consists of five publicly listed companies in the Alcoholic industry of
Nigeria. Annual Time Series data for both independent and dependent variables were
extracted from the respective company’s annual audited financial statements from the period
2016 – 2021.

The Sampling technique is purely financial ratios analysis of the annual reports.

3.4 TYPE AND SOURCE OF DATA

Secondary sources of data were adopted in this research with data collected from the annual
financial reports of Guinness Nigeria Limited, International Breweries Plc, Nigerian

25
Breweries Plc, Golden Guinea Plc., internet, certain journals and publications. The data
collected were carefully examined and verified to ensure that there was any form of
abnormality and inaccuracy. This will ensure a reliable outcome from the data analysis.

The Main secondary data used for this work is gotten from the annual financial reports of the
companies selected in the alcoholic beverage industry. These reports are gotten from their
individual investor relation page and are verified against that which they uploaded on the
database of the Nigerian Exchange. The annual reports used for analysis are the report of the
last five financial years of the individual companies. The four financial statements used are
the balance sheets, the income statement, the cash flow statement and the statement of
shareholders equity.

3.5 FINANCIAL RATIOS USED IN THE ANALYSIS

Emekekwue (2005) notes that when interpreting these ratios, a lot of caution or restraint must
be exercised to avoid making sweeping statements. The ratios must at least be considered
alongside those of other firms in the same industry so as to make proper comparison of
performance.

Emekekwue (2005) stresses on the use of ratio analysis to measure performance of

businesses. He classified ratios into three broad groups.

1. Loan safety ratios

2. Management efficiency ratios

3. Profitability ratios

4. Market ratios

He describes the broad ratios as follows:

1. Loan Safety Ratios: These are of interest to the creditors of a firm (Emekekwue, 2005).
These ratios show how liquid and solvent a firm is. Under this, we have:

A. Liquidity ratios: These are an important class of financial metrics used to determine a
debtor's ability to pay off current debt obligations without raising external capital.

26
Liquidity ratios measure a company's ability to pay debt obligations and its margin of
safety through the calculation of metrics including the following:
i. Current or Working Capital ratio (CR or WCR), is a ratio that measures a
company’s ability to pay short-term obligations or those due within one year.
It tells investors and analysts how a company can maximize the current
assets on its balance sheet to satisfy its current debt and other payables.
CR or WCR = Current asset
Current liability

ii. Quick ratio (QR), measures a company’s ability to meet its short-term
obligations with its most liquid assets. Since it indicates the company’s ability
to instantly use its near-cash assets (assets that can be converted quickly to
cash) to pay down its current liabilities, it is also called the acid test ratio. An
"acid test" is a slang term for a quick test designed to produce instant results.
QR = Current Assets – Inventory – Prepaid expenses
Current liability

iii. Cash ratio (CaR), measures a company's ability to repay its short-term debt
with cash or near-cash resources. This information is useful to creditors and
analysts as it tells the value of current assets that could quickly be turned into
cash, and what percentage of the company’s current liabilities these cash and
near-cash assets could cover.
CaR = Cash and Cash Equivalent
Current liability

iv. Net Working Capital (NWC), is the net amount of all elements of working
capital. It is intended to reveal whether a business has a sufficient amount
of net funds available in the short term to stay in operation.
NWC = Current assets - Current liabilities

v. Operating cash flow ratio (OCFR), measures how readily current

liabilities are covered by the cash flows generated from a company's
operations. This ratio can help gauge a company's liquidity in the short term.
OCFR = Operating cash flow (EBIT)
Current liability

27
B. Leverage / Gearing Ratios: These are any one of several financial measurements that
looks at how much capital comes in the form of debt (loans) or assesses the ability of
a company to meet its financial obligations. This category is important because
companies rely on a mixture of equity and debt to finance their operations, and
knowing the amount of debt held by a company is useful in evaluating whether it can
pay off its debts as they come due. Several common leverage ratios are discussed
below:
i. Debt-to-Equity (D/E) Ratios, is a measure of the degree to which a company
is financing its operations through debt versus wholly owned funds. More
specifically, it reflects the ability of shareholder equity to cover all
outstanding debts in the event of a business downturn.
D/E = Total Liability
Total Shareholders’ Equity

ii. Debt-to-Capital ratio, is an indicator that measures the amount of debt in a

company’s capital structure. It is used to evaluate a firm's financial
structure and how it is financing operations. Typically, if a company has a
high debt-to-capital ratio compared to its peers, it may have a higher default
risk due to the effect the debt has on its operations.
DCR = Short-term Debt + Long-term Debt
Short-term Debt + Long-term Debt + Shareholders’ Equity

iii. Degree of Financial Leverage  (DFL), is a ratio that measures the sensitivity
of a company’s Earnings Per Share (EPS) to fluctuations in its operating
income, as a result of changes in its capital structure. It measures the
percentage change in EPS for a unit change in Earnings Before Interest and
Taxes (EBIT).
DFL = % Change in EPS
% Change in EBIT

iv. The  Debt-To-EBITDA Leverage Ratio, measures the amount of income

generated and available to pay down debt before covering interest, taxes,
depreciation, and amortization expenses. Debt/EBITDA measures a
company's ability to pay off its incurred debt. A high ratio result could
indicate a company has a too-heavy debt-load.

28
 D/EBIDTA = Debt
EBIDTA

v. Debt Ratio (DR), measures the extent of a company’s leverage. It can be

interpreted as the proportion of a company’s assets that are financed by debt.
A ratio greater than 1 shows that a considerable portion of a company's debt
is funded by assets, which means the company has more liabilities than
assets. A high ratio indicates that a company may be at risk of default on its
loans if interest rates suddenly rise. A ratio below 1 means that a greater
portion of a company's assets is funded by equity.
DR = Total Debt
Total Assets

vi. Equity Ratio (ER), measures the amount of leverage used by a company. It
uses investments in assets and the amount of equity to determine how well a
company manages its debts and funds its asset requirements. A low equity
ratio means that the company primarily used debt to acquire assets, which is
widely viewed as an indication of greater financial risk. Equity ratios with
higher value generally indicate that a company is effectively funded its asset
requirements with a minimal amount of debt.
ER = Total Equity
Total Assets

C. Coverage Ratios: Is broadly a metric intended to measure a company's ability to

service its debt and meet its financial obligations, such as interest payments
or dividends. The higher the coverage ratio, the easier it should be to make interest
payments on its debt or pay dividends. The trend of coverage ratios over time is also
studied to ascertain the change in a company's financial position (Hayes, 2020).

i. Interest Coverage Ratio (ICR), is a debt and profitability ratio used to

determine how easily a company can pay interest on its outstanding debt. It is
sometimes also called the Times Interest Earned (TIE) ratio. Lenders,
investors, and creditors often use this formula to determine a company's
riskiness relative to its current debt or for future borrowing. (Hayes, 2021)
ICR= EBIT

29
 Interest Expense

ii.Debt Service Coverage Ratio (DSCR), measures how well a company is able to
pay its entire debt service. Debt service includes all principal and interest
payments due to be made in the near term. A ratio of one or above is
indicative that a company generates sufficient earnings to completely cover
its debt obligations (Hayes, 2020).
DSCR = Net Operating Income
Total Debt Service

iii. Asset Coverage Ratio (ACR), is similar in nature to the debt service coverage
ratio but looks at balance sheet assets instead of comparing income to debt
levels. As a rule of thumb, utilities should have an asset coverage ratio of at
least 1.5, and industrial companies should have an asset coverage ratio of at
least 2 (Hayes, 2020).
ACR = Total Assets - Short-term Liabilities
Total Debt

iv. Fixed-Charge Coverage Ratio (FCCR), measures a firm's ability to cover

its fixed charges, such as debt payments, interest expense, and equipment
lease expense. It shows how well a company's earnings can cover its fixed
expenses. Creditors will often look at this ratio when evaluating whether to
lend money to a business (Hayes, 2021).
FCCR = Adjusted EBIT
Fixed Charge Before Tax + Interest

v. EBITDA-to-Interest Coverage Ratio (EBITDA / ICR), is used to assess a company's

financial durability by examining whether it is at least profitable enough to pay off
its interest expenses using its pre-tax income (Hayes, 2021).
EBITDA / ICR = EBITDA
Total Interest payment

30
 Average collection period[3]
Degree of Operating Leverage (DOL)
DSO Ratio.[18]
Average payment period[3]
Asset turnover[19]
Stock turnover ratio[20][21]
Receivables Turnover Ratio[22]
Inventory conversion ratio[4]
Inventory conversion period (essentially same thing as above)
Receivables conversion period
Payables conversion period
Cash Conversion Cycle

2. Management Activity / Efficiency Ratios are ratios used to measure the efficiency of
management. They address how management has been utilizing its available resources. These
ratios include:

A. Performance Ratios:
i. Accounts Receivable Turnover =
Average Account receivable X Total days in a Year
Total Net Revenues

ii. Account Payable turnover =

Average Account receivable X Total days in a Year
Total Cost of Goods sold

iii. Inventory Turnover =

Average Account receivable X Total days in a Year
Total Credit Revenues

iv. Account Payable Turnover =

Average Inventory X Total days in a Year
Annual Cost of Goods sold

v. Equity Turnover Ratio =

Total Revenue
Total Equity

31
 vi. Fixed asset Turnover Ratio =
Total Revenue
Total Equity

vii. Total Asset Turnover Ratio =

Net Sales
Average Total Assets

viii. Creditors Ratios =

Creditors x Total days in a Year
Credit Purchases

ix. Stock Turnover Ratio =

Cost of Goods Sold
Average Stock

x. Turnover to Working Capital =

Total Revenues
Working Capital

xi. Contribution Margin to Revenues Ratios =

Revenues Variable Cost
Revenues

xii. Contribution Margin to Revenues Ratios =

Revenues Variable Cost
Revenues

xiii. Contribution Margin to Revenues Ratios =

Revenues Variable Cost
Revenues

B. Expenses Control Ratios:

i. Operating ratio =
Total Operating Cost
Total Revenues

ii. Average Financial Charges ratio =

Financial Charges

32
 Revenues

iii. Selling and Distribution Cost Ratios =

Selling and Distribution Cost
Revenues

iv. Administrative Cost Ratio =

Administrative Cost
Revenues

i. Fixed Asset Coverage Ratio (FACR), shows the amount of fixed assets being financed
by each unit of long-term funds. It helps to determine the capacity of a company to
discharge its obligations towards long-term lenders indicating its financial strength and
ensuring its long-term survival.
FACR = Fixed Asset
Long term Loan

3. Profitability Ratios are ratios that measure the profitability of a firm. These ratios
include:

A. Return on Capital Employed, ROCE =

Profit before interest and tax-Income from external investment
Shares capital + debt + reserve – external investment

B. Net Profit Margin =

Net Profit
Total Revenues

C. Return on Assets, ROA =

Profit before Interest and Taxes
Total Assets

D. Cross Profit Margin =

Gross Profit
Total Assets

33
E. Return on Investment, ROI =
Profit Before Interest and Taxes
Total Capitalization

F. Equity Profitability Ratios

i. Return on Equity, ROE =

Profit after Tax

Total Equity
ii. Earning Per Share =
Profit after Tax
Total Number of Shares

iii. Dividend Per Share =

Dividend Pay Out
Total Number of Shares

iv. Price Earning Ratio =

Market Price Per Share
Earning Per Share

v. Earnings Yield = Profit after Tax less prior shares x Par value of shares

vi. Total number of Shares market price of share =

Earning Per Share X Par Values of Share
Market Prices of Share

vii. Dividend Yield =

Quantum of Dividend X Par Value per Share
Market value of share

viii. Dividend Cover =

Profit after tax less Prior Charges (preference share interest)
Dividend Payable

ix. Preference Cover =

Profit after Tax

34
 Interest Payable to preference shareholders

4. Market Value and Growth Ratios: measure investor response to owning a company's
stock. These are concerned with the return on investment for shareholders, and with the
relationship between return and the value of an investment in company's shares
(Wikipedia, 2021)

A. Earnings Per Share =

Net Earnings
Number of Share
B. Payout ratio =
Dividend
Net Earnings or EPS

C. Dividend Cover (the inverse of Payout Ratio) =

Earnings per Share
Dividend per Share

D. P/E ratio =
Market Price per Share
Diluted EPS

E. Dividend yield =
Dividend
Current Market Price

F. Cash Flow Ratio or Price / Cash Flow Ratio=

Market Value per Share
Present Value of Cash Flow per Share

G. Price To Book Value Ratio (P/B or PBV) =

Market Price per Share
Balance Sheet Price per Share

35
H. Price / Sales Ratio =
Market Price per Share
Present Value of Cash Flow Per Share

I. PEG Ratio =
Price per Earnings
Annual EPS Growth

J. EV/EBITDA =
Enterprise Value
EBIDTA
K. EV/Sales =
Enterprise Value
Net Sales

36
 REFERENCE

Drury, C. (2008). Management and Cost Accounting, Seventh Edition. London: Cengage
learning. Research Journal of Finance and Accounting, www.iiste.org, ISSN 2222-
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Emekekwue, P. (2005) Corporate Financial Management, Kinshasa: African Bureau of

Educational Sciences.

Hayes, A. (2020) Coverage Ratio, Guide to Financial Ratios, Investopedia, Reviewed

by Boyle and Bellucco- Chatham,
https://www.investopedia.com/terms/c/coverageratio.asp. Retrieved on December 5, 2021.

Hayes, A. EBITDA-To-Interest Coverage Ratio, Guide to Financial Ratios, Investopedia,

Reviewed by Brook, https://www.investopedia.com/terms/e/ebitdacoverinterestratio
.asp. Retrieved January 07, 2021.

Hayes, A. Fixed-Charge Coverage Ratio, Guide to Financial Ratios, Investopedia, Reviewed

by Drury and Ariel, https://www.investopedia.com/terms/f/fixed-chargecoverageratio
.asp. April 16, 2021.

Hayes, A. Interest Coverage Ratio, Guide to Financial Ratios, Investopedia, Reviewed

by James and Munichiello, https://www.investopedia.com/terms/c/coverageratio.asp.
October 5, 2021.

Format Wikipedia. Year. “Article Title.” Last modified Date. URL.

Reference Wikipedia. 2019. “Evolutionary History of Life.” Last modified November 13, 2019.
list https://en.wikipedia.org/wiki/Evolutionary_history_of_life.

In-text (Wikipedia 2019)

citation

37
Updated April 16, 2021

Reviewed by 

AMY DRURY

Fact checked by 

ARIEL COURAGE

38