The Effect of Accounting Ratios on the Effective Management of Foreign Companies in Nigeria

• Post by: eraf
• June 10, 2023
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ABSTRACT

This seminar paper examined the effect of accounting ratios on the effective management of foreign companies in Nigeria. The data were gathered from the annual report and accounts of sampled foreign companies operating in Nigeria form 2011 -2020. The research work made use of multiple regression method. Debt Equity Ratio (DER), Time Interest Earned Ratio (TIER), Long Term Debt Ratio (LTDR) and Liquidity ratio (LQR) are used as proxy for accounting ratio, while Earning Per Share (EPS) was used as a measure of performance of foreign companies in Nigeria using multiple regression technique, E-view 9.0 software package. Debt to equity ratio and liquidity ratio has significant effect on the earnings per share of foreign companies in Nigeria. While time interest ratio and long-term ratio has insignificant effect on the earnings per share of foreign companies in Nigeria. The result shows positive influence of Debt Equity Ratio and liquidity ratio while Time Interest Ratio and Long-term Ratio has a negative influence on earnings per share of foreign companies in Nigeria. Based on the findings of this study, the researcher recommended that; the management of foreign companies should optimize the use of debt equity ratio in order to increase its profitability and boost their earnings. They must caution against the use of time interest ratio and long-term debt ratio, since failing to meet its obligations can force a company into bankruptcy. And they should involve the use of liquidity ratio as it helps to checkmate and determine its structure and debt capacity. Since it is significant, it means that the company can pay off all its current liabilities.

Keywords: Accounting Ratios; Foreign Companies in Nigeria; Effective Management

FULL PDF  |  DOI: 10.5281/zenodo.7793866