FINANCIAL INFORMATION AS A TOOL FOR MANAGEMENT DECISION MAKING (A CASE STUDY OF MTN NIG)

CHAPTER 1

1. 1. BACKGROUND OF THE STUDY

In order to improve the usage of financial information in the context of the decision making process,we need to analyze financial statements. In that context, we can describe financial statementanalysis as the process where we convert data from financial statements into usable informationfor business quality measurement by different analytical techniques, which is very important in theprocess of rational management.

Therefore, to know the current level of business quality is verysignificant in the context of future business management, since we try to ensure company’s developmentand existence on the market. Financial statement analysis comes before the managementprocess that is before the process of planning which is the component of the management process.

Planning is very important for good management. Good financial plan has to consider all company’sstrength and weaknesses.

The task of financial statement analysis is to recognize good characteristics of the company so thatwe could use the most of those advantages, but also to recognize company’s weaknesses in orderto take corrective actions. Because of that, we can say that management of the company is themost significant user of financial statement analysis.

The research intends to investigate financial information as a tool for management decision making with a case study of MTN NIG.

1. 1. STATEMENT OF THE PROBLEM

The problem confronting this research is to investigate financial information as a tool for management decision making.

1. 1. RESEARCH QUESTION
2. What is financial information?
3. What is the source of financial information?
4. What is the role of financial information  in management decision making?
5. What is the role of financial information in management decision making in MTN NIG?

1. 1. OBJECTIVE OF THE STUDY
2. To appraise the nature of financial information
3. To determine the nature of  management decision making
4. To appraise the role of financial information in management decision             making
5. To determine the role of financial information in management decision          making in MTN NIG

1. 1. SIGNIFICANCE OF THE STUDY

1.        The study shall analyze the nature and source of financial information

2.        The study shall provide a framework for the use of financial information in   management decision making

3.        The study shall appraise the role of financial information in management       decision making in MTN as a case appraisal

1. 1. STATEMENT OF HYPOTHESIS
2. Ho       Financial information is not significant in MTN

Hi        Financial information is significant in MTN

1. Ho       The level of financial information in MTN is low

Hi        The level of financial information in MTN is high

1. Ho       The impact of financial information in management decision in MTN                           is low

Hi        The impact of financial information in management decision in MTN                           is high

1. 1. SCOPE OF THE STUDY

The study investigates financial information as a tool for management decision making with a case study of MTN NIG

1. 1. DEFINITION OF TERMS

FINANCIAL/FINANCIAL INFORMATON

Decision making process requires information – financial and non-financial information as well.

The most important financial information needed in the process of business decision comes fromfinancial. Therefore, we can say that financial is a service function to management. It, basically,processes or gathers and studies “raw data” and converts them into suitable information inthe process of decision making. The basic characteristics of the financial are:

• Gathering, processing and presenting financial (financial) information
• Information considering company’s business

• Those directed towards different interested users

Financial process contains several phases. Basically, it is a process in which input data convertsinto output information. If we focus our attention on the most significant part of the financial(bookkeeping), then we can present the data processing through several phases as it is shown inFigure 1.

The first data processing phase consists of collecting data about occurred business events. Afterdata collecting comes the second phase of the financial process that consists of business eventanalysis,after that recording in journal and general ledger comes.

At the end of financial period,just before preparing basic financial statements, we need to check data accuracy in the books sincewe make financial statements on the basis of those data. Therefore we prepare the trial balance. Itrepresents the recapitulation of all ledger accounts and financial transactions. After all records arecoordinated and after we find all data accurate, we have the last phase of the financial processthat refers to preparing financial statements. As it has already been pointed out, financial statementshave to satisfy interests of different financial (financial) information users.