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  1. 1. i AN ANALYSIS OF THE PROFITABILITY AND LIQUIDITY AS TOOLS FOR PERFORMANCE EVALUATION IN BANKS (A Case Study of Union Bank Plc.) By OHWOTA PAUL EDIRIN MAT. NO. DSPT/BAF/1314/13992 BEING A PROJECT REPORT SUBMITTED TO THE DEPARTMENT OF BANKING AND FINANCE, SCHOOL OF BUSINESS STUDIES,DELTA STATE POLYTECHNIC,OTEFE- OGHARA. IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF NATIONAL DIPLOMA (ND) IN BANKING AND FINANCE OCTOBER. 2015.
  2. 2. ii CERTIFICATION This is to certify that this project was carried out by OHWOTA PAUL EDIRINin the department of Banking and Finance, Delta state Polytechnic, Otefe-Oghara. _____________ ______________ Signature Date MR. AGUNUWA E.V. Project Supervisor _____________ ______________ Signature Date MR. IGHOAGWONOR W.O Head of Department (Banking and Finance)
  3. 3. iii DEDICATION This project is dedicated to God Almighty who had guide me through my studies.
  4. 4. iv ACKNOWLEDGEMENT I wish to express and recognize the tremendous assistance of my project supervisor Mr. AgunuwaEkokotu Vincent for his audience and all other necessary contribution for making this project a successful one. Also to Mrs. Grace Borke, for her financial assistance, my big brother Mr.VokeBorke, for his guidance and orientation throughout the years of my study. I acknowledge my good friends, my brother Ohwota Anthony, and my sistersfor their love, financial support and encouragement and also my uncle Mr. Sada Solomon for his love and financial support through the period of my study. I am once again very grateful to my parent Mr. and Mrs. Borke for their parental care through all this years. Finally, I must acknowledge our rector Dr. (MRS) C.E. Sogbaike for the upliftment of the institution my special thanks goes to Almighty God for his guidance and protection for making it possible.
  5. 5. v ABSTRACT This purpose of this study among others is to examine the effectiveness of profitability and liquidity ratio as tools for performance evaluation in banks through the analysis of financial statements and to suggest a standard for summarizing the performance of a bank. In this regard, union bankof Nigerian Plc is used as a case study.Personal interview formed the basic source of primary information. In trying to achieve the purposes of the study assumption were made concerning relationship between profitability and liquidity, profitability and gross earnings and assets employed. Two hypothesis were formulated and tested. The findingsof this research among other things are that the profitability of bank is not determined solely by its asset base. Bank profitability directly related to its liquidity. Theprofitability of a bankis not bound to increase as its gross earning. A bank’s gross earnings is directly dependent on its asset.In the light of the above findings, recommendations were made which among other include: That the EPS should be the standard tool for criterion for assessing the performance of the bank. That the bank should be more conscious in determining its’ liquidity position in order not to impair its profitability etc.Finally, it was concluded that qualitative factors such as management quality, asset quality e.t.c. Has to be considered along with ratio analysis if a true performances evaluation must be achieved.
  6. 6. vi TABLE OF CONTENTS Title page - - - - - - - - - i Certification - - - - - - - - - ii Dedication -- - - - - - - - - iii Acknowledgment - - - - - - - - iv Abstract - - - - - - - - - v Table of Contents - - - - - - - - vi-vii CHAPTER ONE:-INTRODCUTION 1.1 Background of Study - - - - - - - 1 1.2 Statement of the problem- - - - - - - 2 1.3 Objectives of the study - - - - - - - 4 1.4 Research questions- - - - - - - - 5 1.5 Research hypothesis - - - - - - - 5 1.6 Scope and limitation of the study- - - - - - 6 1.7 Significance of the study - - - - - - - 6 1.8 The organization study - - - - - - - 8 1.9 Definition of terms- - - - - - - - 8 References- - - - - - - - 9 CHAPTER TWO :-LITERATURE REVIEW 2.1 Introduction - - - - - - - - - 13 2.2 History of Union Bank Plc- - - - - - - 13 2.3 Users of financial statement; their information needs - - 15 2.4 Ratio analysis - - - - - - - - 17 2.5 Ratio analysis and performance evaluation - - - - 20 2.6 Trend analysis - - - - - - - - 21 2.7 Significance of ratio analysis - - - - - - 23 2.8 Inflation and Accounting Ratios - - - - - 25 2.9 Validity of ratio analysis - - - - - - - 28 2.10 Limitation of ratio analysis - - - - - - 29
  7. 7. vii 2.11 Categories of ratio analysis - - - - - - 31 References CHAPTER THREE:-RESEARCH METHODOLOGY 3.1 Introduction - - - - - - - - - 39 3.2 Research design - - - - - - - - 39 3.3 Types/Source of Data - - - - - - - 39 3.4 Research instruments - - - - - - - 40 3.5 Samples and sampling technique - - - - - 41 3.6 reliability and validity of research instrument - - - - 41 3.7 Limitation of the study - - - - - - - 42 References CHAPTER FOUR:-PRESENTATION AND ANALYSIS OF DATA 4.1 Introduction - - - - - - - - - 44 4.2 Data presentation - - - - - - - - 44 4.3 Test of hypothesis - - - - - - - - 51 References 55 CHAPTER FIVE: FINDINGS, CONCLUSION, SUMMARY AND RECOMMENDATION 5.1 Introduction - - - - - - - - - 56 5.2 Summary of findings - - - - - - - - 56 5.3 Conclusion - - - - - - - - - 60 5.4 Recommendations Reference Appendix Questionnaire
  8. 8. viii Contact me for full content……+2348146437671

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