Financial performance appraisal of fan milk limited

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This piece of work attempts to provide an empirical validation of some of the widely held existing theories on the determinants of firm performance. The study used financial statements of a Ghanaian manufacturing firm, Fan Milk Limited over a time frame of five years from 2002 to 2006. The main problem that triggered this work was that shareholders as owners do not get involved in the day to day running of the company since ownership and control are separated in limited liability companies and that this all important activity is left in the hands of managers who act as stewards. The study mainly sought to investigate into the financial health, safety and probability of bankruptcy and determined the assets, dividend and net profit rates of the company and to analyze the financial performance of the company. Literature was reviewed on financial performance appraisal while the methodology focused on the Z-cores, trend and growth analysis in accordance with the reasons for the trend in an interview. Z-scores, financial ratios, specifically profitability, liquidity and investor as well as the company’s growth rate calculated from the same financial statements were used to analyze the financial performance of Fan Milk Limited for the respective years. The company had been profitable and is worth investing into but needs to improve its liquidity position. It has been growing positively but needs to utilize its assets effectively. Financially, Fan Milk Limited could be said to be safe, healthy and devoid of probable bankruptcy for the five year period from 2002 to 2006. This piece of work recommends that the company expands its scope by coming out with other product lines to widen the market base and help effective utilization of assets to generate further returns.
A thesis submitted to the School of Business in partial fufilment for the Degree of Master of Business Administration (MBA) School of Business, College of Art and Social Science