RATIO ANALYSIS: A MANAGERIAL APPROACH TO MEASURING AND coMPARING MANAGEMENT AND CORPORATE PERFORMANCE IN GUINNESS NIGERIA PLC, NIGERIAN BREWERIES PLC, LIFE BREWERIES CO. LTD AND PREMIER BREWERIES CO. LTD

Abstract

This study was intended to ascertain whether ratio analysis could serve a functional managerial approach to measuring and comparing management and corporate performance in firms of the same industry, using Guinness Nigeria plc, Nigeria Breweries plc, Life Breweries Co. Ltd and Premier Breweries Co. Ltd, as case studies. It was undertaken to seek solutions to the despondent nature of corporate organizations through sensing danger areas and making amends before the spelt doom is experienced, through the use of Financial Analytical tool — Ratio Analysis. A five-year analytical review of the inter-firm financial ratios was taken and compared. The ratios chosen to aid this analysis were — the liquidity ratio, the efficiency ratio, the Leverage ratio, the investibility ratio and the profitability ratio. The data analytical tool applied in the study is Robertson Multivariate Ratio Analytical Model, and the Chi-square which was used to test the hypothesis. A comparison of the four firms being studied was done through the use of tables and trend analysis, to clearly show the computation and enhance quick understanding of the whole analysis. It was found that a careful application of ratio analysis would, serve a functional financial tool for measuring and comparing corporate performance; provide progressive insight into the financial strengths and weaknesses of the firm; serve as warning indicator to impending failure, for early solution to be sought; motivate managers to fully exploit the profit potentials of their firms, and facilitate planning ahead to meet the challenging forces of our variable economy. The recommendations resulting from this research work were that; ratio must not be used as the only criterion for analyzing firm's performance; consistency and constancy should be maintained in employing ratio for perforrnance analysis; absolute reliance on accounting figures alone may be misleading due to its insufficiency; ratios should always form an essential reference document especially during periodic management planning; and a greater attention is required to be paid on the modalities of finance.The study concludes that, adequate application of ratio analysis serves as an effectwe functional managerial tool for measuring and comparing management and corporate performance in firms of the same industry, but must be applied alongside other functional financial techniques to avoid conflicting results.