The Relevance of Financial Ratio Analysis in the Appraisal of Small Scale Business

This research work examined the relevance of financial ratio analysis in the appraisal of small scale business with particular reference to Mr. Biggs fast food in cross river state. The study examined the establishing of the extent to which accounting ratio can be used to interpret accounting records of small scale business, finding and analysing the meaning of financial ratio analysis to the researcher knowledge and understanding of financial statement of the company, to establish the effect of ratio analysis on the users of financial statement and to highlight available ratios for measuring the true state of performance of company.

The data were collected from both primary and secondary sources, while primary data was collected by the use of questionnaires; the secondary data were based on readings from textbooks, internet and journals.

Data from the response to questionnaire was presented using the statistical tool Chi- square. From the analysis, the findings showed that non challant attitude in the use of financial statement affects small scale business; obsolete use of data affects small scale  business  and  also  that  lack  of  competent  management  affect  small  scale business. It was however recommended that the retained earnings of the small scale
business should be properly invested in order to have more capital for business