The choice of the topic also allow me to practically apply my theoretical knowledge , which learned through COCA exams, into a practical scenario. My choice of Access Bank was a result of the recent Central Bank of Nigeria banks’ special examination that reveal some banks grave financial condition and others were given a clean bill of financial health. In which Access bank Pl was among the those with a clean bills of financial health. Apart from this I used to be an employee and a customer of the bank and to effectively analyses the business and financial information of any organization one needs to have access to its financial data.
Access bank is also listed in Nigeria stock Market which makes it mandatory for the Bank to publish its Financial statements even make it available on the internet. . 3 AIMS AND OBJECTIVES OF THE REPORT These aims of this report are as follows: To analyze the Financial and non financial information of Access Bank Pl. In order to give the users a better overview of the overall performance of the company’s business. To determine how liquid and profitable the bank has been over the last three years.
To evaluate the business performance of Access bank and by extension, other Banks in the Banking Industry in Nigeria using (pest analysis and soot analysis model) To determine the overall going concern status of Access bank Pl as compared to Guaranty Trust bank and Diamond bank Pl being the major competitors in the banking industry . TO make recommendations base on the findings of this research report. 1 a RESEARCH QUESTIONS In caring out this report a number of questions will be raised to which answers will be provided at the end of the research report.
The questions are: How does Financial and non financial information of Access bank Pl affect the overall performance of the Bank? What is the Liquidity and Profitability level of Access bank Pl over the last 3 years. What is the level of business performance of Access Bank Pl using SOOT and PEST analysis model in relation with other banks in the banking industry What is the going concern status of Access Bank Pl in comparison with other competitors in the Banking industry. IA RESEARCH APPROACH This research and analysis report examines the financial position of Access bank Pl.
The analysis is carried out from a stakeholders point of view. The research will evaluate Access bank’s performance in light of general banking environment and also make comparison with Guaranty trust bank Pl and Diamond Bank Pl two of its closest rivals in the industry. This research is carried out using secondary data. .NET through various academics texts for business models which will provide a structured approach to analysis of financial performance, its strategies and position within the banking industry. The financial report of the bank was also used coupled with the reviews of the bank from independent stockbrokers on the internet.
Finally, I made a checklist from which I tick off each project objective and research questions I felt had answered upon the completion of the project. INFORMATION GATHERING 2. 1 SOURCES USED FOR INFORMATION GATHERING This topic evolves round analyzing the Business and Financial reference of a company. Most of the information I have used are basically financial of Access Bank Pl coupled with relevant materials from personal study on the subject matter as well as materials obtained from the internet. FINANCIAL OF THE COMPANY IN VIEW: This constitutes the primary source of information which includes the Income Statement, Balance sheet, etc.
The reason for its use is to give a better understanding to readers of this write up as it has to do with the actual performance of an organization and not fictitious set of accounts. Another primary source of information is enquires add from the Financial control department. Other sources which are secondary include relevant materials from text materials and materials downloaded from the internet. References are made to these in other sections of this report. 2. 2 DESCRIPTION OF METHODS USED TO GATHER INFORMATION 1. Published financial statements of the bank was studied and critically analyses using different analytical models 2.
Some members of staff of the bank were interviewed by me and information gotten was documented. This serves as a vital method of getting internal and relevant information about the bank. 3. I made use of different libraries including the Bank’s Library to get books, reports and Financial journals such as Augusto and co. 2010 Bank Rating Report, Votive Reach Report from a stockbroker and Standard & poor Global Credit Portal Ratings Direct, Coca study packs etc. For this research report 4. The use of the internet facility also aided my research work. As able to get related materials from different websites. I started this research work by downloading from the COCA website the oxford brooks project guidelines and I rounded it up by printing out the project submission form. All wrought the work, the internet proves to be indispensable. 2. 3 LIMITATION OF INFORMATION GATHERING Some of the information was collected from Access Bank Pl website which may be favorably biased towards the company. Some sources of information may contain research carried out with different objectives than this research report.
It is difficult to judge whether such information should be used for the purposes of this research report or not. The Financial statements of the company may be a bit favorably biased towards the company as through these the company aims to present itself in the best Seibel manner. Some of the reports such as carried out by Votive research , were not available free and were not also available at the Libraries. 2. 4 ETHICAL ISSUES The issue that arose was of plagiarism. As most of my research is from secondary data, there was a risk of plagiarism if any information that was used was not properly referenced.
For this I took special care. I clearly identified and attributed any thoughts or quotations which were not my own at he points where they occur in my research report and used the Havana Referencing system as in the Oxford Brooks University information pack to eliminate beyond any possible doubt any chance of Plagiarism. 2. 5 ACCOUNTING TECHNIQUE USED (FINANCIAL ANALYSIS) The accounting technique that I have decided to use for this research work financial analysis which will gives detail analysis of the bank’s financial information Financial ratios can be classified according to the information they provide.
The following types of ratios will be considered for this research report: Liquidity ratios Profitability ratios equity Ratios Liquidity ratios provide information about a firm’s ability to meet its short- term financial obligations. They are of particular interest to those extending short-term credit to the firm. Two frequently-used liquidity ratios are the current ratio (or working capital ratio) and the quick ratio. The current ratio is the ratio of current assets to current liabilities: Current Ratio Current Assets Current Liabilities Short-term creditors prefer a high current ratio since it reduces their risk.
Shareholders may prefer a lower current ratio so that more of the firm’s assets are working to grow the business. Typical values for the current ratio vary by firm and industry. For example, firms in cyclical industries may maintain a higher current ratio in order to remain solvent during downturns. One drawback of the current ratio is that inventory may include many items that are difficult to liquidate quickly and that have uncertain liquidation values. The quick ratio is an alternative measure of liquidity that does not include inventory in the current assets.
The quick ratio is defined as follows: Quick Ratio Current Assets – Inventory The current assets used in the quick ratio are cash, accounts receivable, and notes receivable. These assets essentially are current assets less inventory. The quick ratio often is referred to as the acid test. This ratio measures the company’s ability to meet current debt, a stringent test since it discounts the value of inventories. The rule of thumb is 1 -to-I . A lower ratio indicates liquidity. A higher ratio may imply inefficient use of funds) Financial Troubleshooting (2000) Defining key Financial ratios (online).
Available http:/ /www. Inc. Com/articles. Com[Accessed September 2010] Finally, the cash ratio is the most conservative liquidity ratio. It excludes all current assets except the most liquid: cash and cash equivalents. The cash ratio is defined as follows: Cash Ratio Cash + Marketable Securities The cash ratio is an indication of the firm’s ability to pay off its current liabilities if for some reason immediate payment were demanded.. Profitability Ratios Profitability ratios offer several different measures of the success of the firm at generating profits.
The gross profit margin is a measure of the gross profit earned on sales. The gross profit margin considers the firm ‘s cost of goods sold, but does not include other costs. It is defined as follows: Gross Profit Margin Sales – Cost of Goods Sold Sales Return on assets is a measure of how effectively the firm’s assets are being used to generate profits. It is defined as: Return on Assets Net Income Total Assets Return on equity is the bottom line measure for the shareholders, measuring the profits earned for each dollar invested in the firm’s stock.
Return on equity is defined as follows: Return on Equity Shareholder Equity (FINANCIAL RATIOS) While 2. 6 LIMITATION OF ACCOUNTING TECHNIQUE financial ratio analysis can provide us with important insight into a Oman)ads performance, a good financial analyst will be aware that there are some important limitations that should be noted when using financial ratios as an analytical tool in financial analysis. Limitations of Financial Ratio Ratio analysis is a retrospective, not prospective examination. Ratio analysis is based on accounting not economic data. Ratios do not capture significant off-balance sheet items.
Basic ratios can be manipulated through acceptable alterations of accounting policies (e. G. , LIFO/FIFO). Financial statement accounts reflect historical cost not necessarily current economic value. 2. 7 BUSINESS TECHNIQUE (SOOT AND PEST ANALYSIS MODEL) SOOT ANALYSIS The SOOT analysis combines the results of the environmental analysis and the internal appraisal into one framework for assessing the firm’s current and true strategic fit, or lack of it, with the environment. It is an analysis of the organization’s strengths and weaknesses, and the opportunities and threats offered by the environment. BP Learning media, 201 0) A SOOT analysis IS carried out in this research report to analyses both internal and extender factors which affect the business performance of Access Bank Pl. It carries out an assessment of a company’s strengths and weakness which relate to internal factors such as resources and capabilities. It also assesses the opportunities and threats that may arise in the future. This involves an analysis of external factors such as the economic environment and the industry structure. Source: SOOT analysis diagrams. Samaritan. Mom PEST ANALYSIS PEST is a strategic planning tool used to evaluate the impact political, economic, social, and technological factors might have on a project. It involves an organization considering the external environment before starting a project. PEST is used in this research report as extension of external analysis in SOOT to access the external factors that affect the business performance of the bank. Political factors include areas such as tax logic, employment laws, environmental regulations, trade restrictions and tariffs and political stability.
Economic factors are economic growth, interest rates, exchange rates and inflation rate. Social factors often look at the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Technological factors look at elements such as R activity, automation, technology incentives and the rate of technological change. LIMITATION OF BUSINESS MODEL (SOOT ANALYSIS) SOOT Analysis is 2. 8 not free from its limitations. It may cause organizations to view circumstances as very simple because of which the organizations might overlook certain key strategic contact which may occur.
Moreover, categorizing aspects as strengths, weaknesses, opportunities and threats might be very subjective as there is great degree of uncertainty in market. SOOT Analysis does stress upon the significance of these four aspects, but it does not tell how an organization can identify these aspects for itself. There are certain limitations of SOOT Analysis which are not in control of management. These include- a. Price increase; b. Inputs/raw materials; c. Government legislation; d. Economic environment; e. Searching a new market for the product which is not having overseas market due to import restrictions; etc.
Internal limitations may include- a. Insufficient research and development facilities; b. Faulty products due to poor quality control; c. Poor industrial relations; d. Lack of skilled and efficient labor; etc LIMITATION OF BUSINESS MODEL (PEST ANALYSIS) The external factors considered during PEST analysis are dynamic and they change at a very fast pace. At times, these changes may occur in less than a days time, thus making it tricky to predict why and how these factors may effect the present or future of the project.
On many occasions, environmental changes that may have an adverse effect on the project may not be noticeable during their initial stages. All that indicates that a certain amount of uncertainty still remains even after carrying out a detailed PESTLE analysis, which to some extent defeats the prime purpose of this analysis – cutting down the uncertainty 1. Its simple presentation can also be considered a limitation. For PEST analysis, the usual procedure is to present a simple list of the environmental factors that can affect the project.
Unless the attributing actors are critically examined in terms of the degree of impact, the findings of the analysis do not seem to be of much value. 2. Collecting enormous amounts of relevant data from the right sources becomes a bit of a problem, especially since most of the pertinent data must be collected from external agencies. This makes PEST analysis not only time consuming but costly as well. Also, getting the latest data and keeping the analysis updated with it becomes a problem. 3. The lack of easily available updated information, as mentioned in the point above, leads to one more problem – making too many assumptions.
Oftentimes, the factors mentioned in the analysis are based more on assumptions and less on actual facts. An analysis based on unfounded assumptions can lead to planning disasters. So, its important to device some method to cross-verify whether the factors mentioned in the PEST analysis are not merely based on tenuous assumptions. 4. A proper PEST analysis requires a lot of information to be collected. But when handling too much information, the users tend to get confused and lose sight of what factors are more critical. This ambiguity in proportioning the affecting factors can put the entire planning on the wrong track.