DECLARATION

We, the undersigned do hereby declare that this literature titled The Relevance Of Financial
Statement And Their Impact On The Performance Of Organization, with the exception of
reference and quotations which serve as a source of valuable information is the original
product of our own research, carried out under the supervision of Mr. Edward Sedzro of the
Accountancy Department, Ho Polytechnic, Ghana.
We will duly accept any mistake that would be detected by other uses of this material in good
faith

NAME

INDEX

SIGNATURE

DORGBETOR, OLIVIA

03120329

PEDIATOR SAMUEL

03120405

..

AMOAKO ELVIS

03120276

..

ii

DATE
.

CERTIFICATION
This is to certify that I Mr. Edward Sedzro supervised this literature entitled The Relevance of
Financial Statement and Their Impact on the Performance of Organization presented by
PEDIATOR Samuel, DORGBETOR Olivia, and AMOAKO Elvis meet the requirement for
the award of HIGHER NATIONAL DIPLOMA HND in the Accountancy Department of the
School of Business and Management Studies, Ho Polytechnic.

Sign.
Mr. Edward Sedzro
Supervisor

Sign
Mr. Edinam Agbemava
Head of Department, Accountancy

iii

DEDICATION
This work is dedicated to our Father in Heaven who has seen was through successful
completion of it all.
It is also dedicated to our parents Mr. and Mrs. Pediator, Mr. and Mrs. Dorgbetor and Mr. and
Mrs. Amoako, for their tremendous support given to us through our education to this level.
Finally to every Daniel who supported us in various ways.

iv

ABSTRACT
This study was an exploratory study undertaken to know the relevance of financial statement
and their impact on the performance of organization. The study was centered on small and
medium scaled business in the Ho Municipality with emphasis on Dzialet Limited.
The specific objective of the study was to bring s to determine whether or not small and
medium scaled businesses keep proper accounting records and to ascertain if the records kept
use the generally accounting principles.
The study was also meant to bring to light those small and medium scaled businesses that do
not keep proper or no records at all and the reasons why they do not keep records.
In order to come out with findings, the researchers used the technique of simple random and
purposive sampling techniques to select data from both the management and employees of the
organizations under review.

ACKNOWLEDGEMENT
Our profound gratitude goes to the Almighty God whose guidance, protection and love saw us
through the successful completion of this work.
Our sincerest and heartfelt gratitude to our supervisor, Mr. Edward Sedzro, who constructive
criticism, guidance, practices, corrections and suggestions proved a n invaluable contribution
Hearty thanks also to the management and employees of Dzialet Limited who sacrificed their
precious time, in serving as a source of information.
Since time and space will not permit us to acknowledge individually all those who help us in
diverse ways to complete this work, we pray that the Almighty God richly bless you all.

vi

TABLE OF CONTENTS
Declaration

ii

Certification

iii

Dedication

iv

Abstract

Acknowledgement

vi

List of Tables and appendices

xi

List of Diagram

xii

CHARTER ONE
1.0 INTRODUCTION...........................................................................................

1.1 Background Of The Study..............................................................................

1.2 Problem Statement Or Research Problem..........................................................

1.3 Research Objectives.......................................................................................

1.4 Research Questions........................................................................................

1.5 Significance Of The Study..............................................................................

1.6

Scope and limitation of the study ..

1.7

Brief Profile Of Dzialet Distribution Company................................................

1.8

Research Methodology

1.9 Organization of the study .

vii

CHAPTER TWO
2.0

INTRODUCTION

2.1

Financial Statements.

2.2

Types Of Financial Statements And Their Purpose.

10

2.2.1 Statement Of Financial Position.

10

2.2.2 Statement Of Financial Performance.

13

2.2.3 The Statement Of Changes In Equity

16

2.2.4 Notes..

18

2.2.5

The Statement Of Cashflow..

19

2.3

Uses Of Financial Statement Information.

21

2.3.1

Internal Use..

21

2.3.2

External Use....

21

2.4

Importance Of Financial Statement Analysis..

22

2.5

Objectives Of Financial Reporting...

23

2.6

Limitations Of Financial Statements.

24

2.7

Qualitative Characteristics Of Accounting Information

27

2.7.1 Relevance..

27

2.7.2

28

Reliability........

CHARTER THREE
METHODOLOGY.

31

3.0

INTRODUCTION

31

3.1

Area Of The Study...

31

viii

3.2

Population Of The Study.

31

3.3

Sample Size And Sampling.

31

3.4

Data Collection Method..

32

3.5

Data Analysis..

33

CHAPTER FOUR
DATA ANALYSIS AND PRESENTATION..

34

4.0 INTRODUCTION..

34

4.1 Questionnaires For Staffs Of Dzialet Distribution Company.

34

4.2 Financial Statements Used For Calculation Financial Indicators.

35

4.3 The Effects Of Financial Statement Interpretation On Management Decisions

35

4.4 The Effect Of Accounting Policies On Financial Statement

36

4.5

Types Of Ratios Used In Assessing The Company Performance.

37

4.6

Impact Of Financial Statement On The Companys Performance.

37

4.7

Reasons For Choice Of The Company

39

CHAPTER FIVE
SUMMARY, CONCULSIONS AND RECOMMENDATIONS...

40

5.0 INTRODUCTION

40

5.1 Summary Of Findings..

40

5.2 Conclusions..

41

5.3 Recommendations....

41

APPENDICES ....

42

APPENDICES A: QUESTIONNAIRES

42

APPENDICES B: BIBLIOGRAPHY ...

52

ix

LIST OF TABLE
4.1 Questionnaire to staff and customers .

34

4.2 Financial Statement Used for Calculating Financial Indicators

35

4.3 The Effect of Financial Statements Interpretation on Management Decision

35

4.4 The Effect of Accounting Policies on Financial Statement .

36

4.5 Types of Ratios use in assessing the companys performance .

37

4.6 Impact of financial statements on the companys performance ..

37

4.7 Reasons for choice of the company ..

39

LIST OF DIAGRAM
4.1 The impact of financial statement on the companys performance . 38

xi