Financial Performance of Small Investment Advisory Firms In Ghana: A Case Study of New Generation Investment Services Limited (N.G.I.S)

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From 2000-2007, firms in the investment advisory industry in Ghana have increased from seventeen (17) to twenty-seven (27) (SEC annual report, 2006). Data collected from twenty (20) out of the twenty-seven licensed investment advisers indicated that the industry had a total of about GHØ 0.31 billion of the funds under management (SEC annual report, 2006). This research surveys the industry to determine the finrDJ1i performance of New Generation Investment Services Limited which was used as a case study. The study applies financial analysis and assesses the financial performance of New Generation Investment Services Limited i.e. evaluate how well the company has performed. The goal is achieved through implementation of different financial analyzing tools and techniques, mainly financial ratio analysis. Also, Altman’s Z-score was calculated for the various years under consideration. The average Altman’s Z-score was estimated to predict the future of the company. Ratio analysis showed that profitability of the company was very poor. It was connected with negative returns on both return on capital employed and profit margins. There were also low returns on assets. However, other types of ratios were at acceptable levels. Activity ratios that define the company’s market strategies had more or less good figures as well as the liquidity ratios. According to ratio analysis of financial leverage, the studied company was financially independent. The study also revealed that the average Altman’s Z-score of New Generation Investment Services Limited was 2.3357. This means that, theoretically the company is in a “Grey” zone. As a result of that if the financial position of the company keeps on improving as per the financial statements then the company will be in a position to fulfill the going concern concept, otherwise, it will drop to the distress zone.
A thesis submitted to post graduate studies, 2008