ASSESSMENT OF FINANCIAL STATEMENT ANALYSIS (IN CASE OF DASHEN

BANK WOLAITA SODO BRANCK)

A SENIOR ESSAY SUBMITTED TO DEPARTMENT OF ACCOUNTING AND

FINANCE IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR DEGREE OF
BACHELOR OF ART IN ACCOUNT/NCT AND FINANCE

BY:- TESFAYE TADIWOS

ID/No ACC/WEE/144/06

ADVISOR NETSANET.B

WOLAITA SODO UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCIAL

MAY, 2017

WOLAITA SODO, ETHIOPIA

 ACKNOWLEDGMENT

Firstly I would like to thank almighty god and create of the universe for helping me in all
activities. Secondly I would like to express my deepest, sincerity and respectful gratitude to my
advisors NETSANET. B (MSc) for his valuable and fruit advice in giving clue, hint and showing
best direction in what manner that I could prepare this senior asset. Finally I am also extremely
grateful for my family and my brothers TAKELE for their moral and financial support until the
completion of my research paper.

i
ABSTRACT

The general objective of this study was assessment of financial statement analysis in the case of
Dashen Bank Wolaita Soddo branch. The study used descriptive research design. To collect the
required information for this study purposes, the researcher used census technique because it is
helpful to include all of the respondents in the study in order to get the required information. In
this study, the research used both primary and secondary data in order together relevant
information. Primary data were collected semi-structured interview and researcher designed
questionnaires for this study purposes. Secondary data were collected from published and
unpublished research materials, books, magazines, banks manual, and annual reports. In this
study, the researcher used questionnaires to collect primary data by using close-ended questions
and distributed to Dashen Bank, Wolaita Sodo Branch accountant, auditors, manager and vice
manager of the branch. To analyze the collected data, descriptive statistical analysis techniques
were used like frequency and percentage. The analyzed data were presented by using tables in
the analysis part.

Key Words:

Financial Statement, Income Statement, Balance Sheet, Analysis

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Contents
ACKNOWLEDGMENT................................................................................................................................ i
ABSTRACT.................................................................................................................................................... ii
List of Table .................................................................................................................................................. v
CHAPTER ONE ........................................................................................................................................... 1
1. INTRODUCTION ................................................................................................................................ 1
1.1. Background of the study ................................................................................................................... 1
1.2. Statement of the problem .................................................................................................................. 1
1.3. Objectives of the study...................................................................................................................... 3
1.3.1. General objectives ......................................................................................................................... 3
1.3.2. Specific objectives ........................................................................................................................ 3
1.4. Signification of the study .................................................................................................................. 3
1.5. Scope of the study ............................................................................................................................. 4
1.6. Limitation of the study ...................................................................................................................... 4
1.7. Organization of the study .................................................................................................................. 4
CHAPTER TWO .......................................................................................................................................... 5
2. REVIEW OF RELATED LITRATURE............................................................................................... 5
2.1. Definitions of financial statements ................................................................................................... 5
2.1.1. Balance sheet ................................................................................................................................ 5
2.1.2. Assets ............................................................................................................................................ 6
2.1.3. Investment ..................................................................................................................................... 7
2.1.4. Liability ......................................................................................................................................... 7
2.1.5. Owners equity ............................................................................................................................... 7
2.2. Income statements ............................................................................................................................. 8
2.2.1. Revenue......................................................................................................................................... 9
2.2.2. Cost ............................................................................................................................................... 9
2.2.3. Expense ......................................................................................................................................... 9
2.3. Cash flow statements ........................................................................................................................ 9
2.4.1. Ratio Analysis ............................................................................................................................. 10
2.4.1.1. Standard comparison ............................................................................................................... 10
2.4.1.2. Types of ratios......................................................................................................................... 11

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2.4.2. Liquidity ratio:- ........................................................................................................................... 11
2.4.3. Asset management ratio .............................................................................................................. 12
2.4.4. Profitability ratios ....................................................................................................................... 12
2.4.5. Market value ratio ....................................................................................................................... 14
CHAPTER THREE .................................................................................................................................... 15
3. Research methodology and design ...................................................................................................... 15
3.1. Research design .............................................................................................................................. 15
3.2. Target population ............................................................................................................................ 15
3.3. Sample size ..................................................................................................................................... 15
3.4. Sampling techniques ....................................................................................................................... 15
3.5. Sources and types of data ................................................................................................................ 15
3.6. Methods of data collection .............................................................................................................. 16
3.7. Methods of data analysis ................................................................................................................. 16
CHAPTER FOUR....................................................................................................................................... 17
4. Data Analysis and interpretation ......................................................................................................... 17
5. Summary, Conclusion and Recommendation ..................................................................................... 24
5.1. Summary ......................................................................................................................................... 24
5.2. Conclusion ...................................................................................................................................... 24
5.3. Recommendation ............................................................................................................................ 25
References
APPENDIX

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List of Table

Table 4.1 Respondent profile

Table 4.2 Trends of profitability on Dashen bank recent year.

Table4.3 the strength of financial statement analysis of dashen bank

Table 4.4, the existence of weak financial statement analysis

Table 4.5 Evaluation of financial statement through only debt ratio

Table 4.6 Types of ratios analysis used by Dashen bank

Table 4.7 the evaluation result of financial statement analysis

Table 4.8:- The period of financial statements analysis.

Table 4.9 appropriateness of financial statement analysis Dashen bank recent years?

Table 4.10 the determines accurate financial statement analysis

Table 4.11:- The is analysis all the relevant ratio?

Table 4.12:- The existence of correctives of financial statement analysis (free from the error and
fronds)

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 CHAPTER ONE

1. INTRODUCTION

1.1. Background of the study

Financial statement analysis is an evaluative method of determine the past, current and projected
performance of a company. Several techniques are commonly used as part of financial statement
analysis including horizontal analysis which compares two or more years of financial data in
both dollar and percentage form vertical analysis where each category of accounts on the balance
sheet is shown as a percentage of the total account and ratio analysis which calculates statistical
relationship between data. Financial statements are the major means of communication between
the business organization and user of information for the analysis and issued by the company that
includes balance sheet, Income statement and cash flow statements for achieving. The objective
of the organization they have to be recorded, summarized and analyzed and integrated. It is
performed using summary of information from the company as presented by financial statement
more over financial condition and serves the basic of decision. Thus the research proposal will
define. Financial analysis is process or selection relation and evaluation of financial information
those are, selecting from among the total information available about business enterprise. The
information relevant to decision under consideration and arrangement of the information in my
that will bring out significant relationship. It is the use of analytical or financial tools to examine
and compile financial statements in the company (Stepan, H. Penman, 2004).

1.2. Statement of the problem

Financial Statement refers to formal and original statements prepared by a business concern to
disclose its financial information. According to John.N.Meyer (2008) the financial statement
provides summary of accounts of a business enterprise, the balance sheet reflecting assets,
liabilities and capital as on a certain date and the income statement showing the result of
operation during a certain period.

Performance of financial institutions is relevant from the policy point of view because as finance
growth literature suggests, if banks become better-functioning entities, it is expected to be
1
reflected in strengthening capital buffer, safety and soundness of the financial systems (M.
Joseph, 2007).

The development of the banking industry (which is part of the financial institution) is at a slower
pace when considering the years of the banking industry. Most of the industries in developing
countries are characterized by weak administration, weak resources mobilization capacity and
are also faced with other social and economic problems.

Assessment of financial performance is highly useful to identify the financial strengths and
weaknesses of the firm by properly establishing the relationship between the items of balance
sheet and profit and loss account (Drake, 2010).

The financial statements are prepared with a view to depict the financial position of the concern.
They are based on the recorded facts and are usually expressed in monetary terms. The financial
statement are prepared periodically that is generally for the accounting period. The term financial
statement has been widely used to represent two statements prepared by accountants at the end of
specific period. They are: Profit and loss account or income statement and Balance sheet or
statement of financial position.

The objective of financial statements is to provide information about the financial position,
performance and changes in financial position of an enterprise that is useful to a wide range of
users in making economic decisions.

Financial analysis which measure financial performance is then performed on these statements to
provide management with a more detailed understanding of the figures.

Regarding to assessing and identifying the problems of financial statement analysis in the
Dashen Bank, Wolaita Sodo Branch, it is the subsequent period of the company according to
properly stated statement by not having adequate financial statement analysis and recognition of
the company loss substensional achieve intended objectives. Despite there is financial statement
analysis analyzed in the Dashen Bank, Wolaita Sodo Branch, the improper financial statement
was occurred, in adequateness of response and lack of respondent confident to provide all
information in branch level.

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 1.3. Objectives of the study

1.3.1. General objectives

The general objective of this study was assessment of financial statement analysis in the case of
Dashen Bank Wolaita Soddo branch.

1.3.2. Specific objectives

To identify the type of ratio the bank use.
To determine accurate financial statement analysis in Dashen Bank Wolaita Soddo
branch
To identify the factors affect the financial statements.

Research questions

This study was find on the statement analysis in Wolaita Soddo Dashen Bank in generally this
research paper would tried to answer the following research question

How companies would analysis its financial statement?

How the companies collect the relevant information to analysis the statement properly?
Does the company present financial statement compromise with generally accepted
accounting principles?

1.4. Signification of the study

This study would help both the outsider and insider to understand and recognize the power of
financial statement analysis and shows about one financial institution position of the
company. It also helps to the bank to identify and adopt to analyze its financial statement
furthermore the study can provide information about financial portion, operating activities
and assets of the company to concerned body.

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 1.5. Scope of the study
This study would emphasize on how financial statements was analyze, recognized and how
properly recorded or presented in financial statement which is applicable in Dashen Bank,
Wolaita Sodo branch.

1.6. Limitation of the study

The limitation of the study lies in collecting complete data from Dashen Bank, Wolaita Sodo
branch. When the research was conducted the researcher faced some challenges. That is, there
was lack of research studies and availability of sufficient current literature on the topic. The
major limitation of the paper is that it is only based on primary data. This had the effect to
narrow the analysis to some extent. However, the researcher tried to navigate from different
sources related to this topic.

1.7. Organization of the study

This research paper contains five chapters the first chapters deals with introduction parts,
statement problems, objectives of study, Research question, signification of study, scope of the
study, Limitation of the study and organization of the study, the second chapters deals with
related review literature, the third chapters deals with research design and methodology, the
fourth chapter deals with data analysis and presentation and the fifth chapter deals about
summary, conclusion and recommendations.

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 CHAPTER TWO

2. REVIEW OF RELATED LITRATURE

2.1. Definitions of financial statements

According to the (Panday, 2001), financial statement is a method that a firm communicates
financial information with users through financial statement and reports. Types and firms of
financial statement depend up on the business nature and form of organization wails used
statement are balance sheet, income statement and cash flow statements

2.1.1. Balance sheet

Balance sheet is important statement that proved evaluable information about companies
position. If presents financial position of a business entity on specific date never the less by
studding a balance sheet on understanding so many points about a given business such as:-

- Company liquidity and its ability to generate profits

- It shows whether the company survivals
- How profitable it can be in future
- Whether the company has major obstacle in making profits etc.

General balance sheet provides a historical summary of assets, liability and equity. It is historical
report b/c it shows the communicative effect of past transaction and events the basic accounting
equation is represented by balance sheets following.

Asset = liability + capital (owner equity)

According to Mosich (2004), the classification and the numbers of its items on balance sheet still
vary considerably depending upon the size of enterprise distribution of users.

Asset Liabilities Equity

Current asset Current liability Capital
Investment Long term duct Retained earning
Fixed (plant asset Differed charges Stock holder equity

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 2.1.2. Assets

Assets are probably futures economic benefits obtained or controlled by an entity as a result of
past transaction or events. They are the list of value clowned by firm for purpose of presentation.
However there are two sets of assets classification most widely used

- Current asset
- Fixed asset

Current Asset: Is part of assets that could be converted in to cash within one or less year
deducting current liability. They also are referees working capital of business entity of nature of
current asset is such that calculate from one from to the near to cash through the normal course
of business operations. Assets that are most commonly classified as current asset includes

- Cash
- Short term investment
- Account receivable
- Inventories /stock
- Pre payment

Fixed Asset: - As opposed to current assets. Fixed assets used to relatively for longer time,
usually greater than one year - the represent a bundle of future use in operators common
characteristics of plant assets are:-

- They yield services over many years

- They have longer economic life

According to Mosich (2004), the cost of fixed asset is allocated to the accounting periods
receiving the benefits from their users.

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 2.1.3. Investment

According to the (Kanh MYPK Jahan, 2007), an asset or item that is purchased with the hope
that it will general income or will appreciate them financial investment refer to putting aside
a fixed amount of money and expecting some kind of gain out of it

2.1.4. Liability

Liability is probable future scarifies of economic benefits a rising for present obligation of
particular entity to transfer assets or provide services to other entities in the future. As result
of past transactional that of assets, liabilities are classified in to two major groups current and
long term.

Current liabilities:- are obligations whose liquidation is expected to require the use of
exercising current assets or the creation of the other liability that is these include liabilities or
obligation that should be settled within one year from the date of balance sheet. Hence,
current liabilities include:-

- Trade payable (including accrued liability)

- Short term bank loans and maturing portion of long term loon
- Collection received in advance

Noncurrent liabilities:- According to the (Richard Brealy, 1984), in contrast to current

liabilities long term liabilities are obligation that cannot required the use of current assets
within the fiscal period liabilities classified as long term are:-

- Bonds
- Mortgage
- Bank term loan

2.1.5. Owners equity

According to the (Belverd Needles, 2000), equity is the residual interest of the owners in the
assets of entity that remains of after deducting a liability more specifically this means. It
represents ownership interest in an entity this section of balance sheet constitutes mainly

7
 capital and ret aired earning capital represents, contribution of the owners of business entity.
It may two components stated capital and paid up capital.

However, balance sheet usually presents the paid up portion only,

Retained earnings: - it is an accumulated net income of corporation less amounts distributed to

stock holders and amounts transferred to paid up capital accounts result of stock dividends
retained earnings could have two part:-

- Legal reserves and

- An appropriated reserve

NB: - Retained earning account with negative balance called deficit. To sum up the balance
sheet is financial statement that presents all the company holders and their sources of
financing in monetary terms at one point in time. Since it shows the properties of the
company it is prim important statement for the purses of financial analysis.

Limitation of balance sheet

Most of the time view stated on historical or original cost basis this may be particularly
troubles some in the case of plant asset and equipment and for inventories which may now be
worth two or three times the original cost. The balance sheet of the company is not properly
stated as according to (JAAP principle. It shows the problem on the company financial
statements.

2.2. Income statements

According to F. Brigham(1999), an income statements is financial statements that present

summary of operation result of a business entity for a given period of time fiscal year usually
on year normally income statements has the ensuring features.

- It is summary of revenues cost and expense

- It measures the profit of the firm within this period
- It is link between consecutive balance sheet
- The net effect is to increase or decreases the owners equity account.

8
 The major elements of income statements are as follows:-

- Revenue
- Cost
- Expense

2.2.1. Revenue

According to the (Panday, 2001), revenue is values of goods and services which a company or
business enterprise transfer to its cost owners. It is the main factor for increment in net asset of
entity other the investment by the owners in general.

Revenue equals the inflow of cash and receivables from sales made during that period. It equals
the value of assets received from customers.

2.2.2. Cost

According to the (Eugene F.Brigham and Joel F.Housten (1999), cost is four value of assets,
services received or capital is realized of the time at transaction has taken place.

2.2.3. Expense

Expense are costs of good or service used to obtain or generate revenues in general terms the
primary purpose of income statement is to determine and presents he profit or list of the business
entity during the given period. This is accomplished by matching revenues of the period with
expense of same period on ratites attested by the method followed among this the cost and
matching principles affects highly the process of valuation. In sprit of the above it provides
valuable information about a business operation performance of given (Richard Brealy, 1984).

2.3. Cash flow statements

Credits usually are requested payments anticipated from profit. In effect profit are not the same
cash most of the time profit and liquidity may not go hand on hand in the short terms of at least,
it is the availability fund that repay creditors than profit which might be committed in the higher
stock level etc. Therefore these suggest that small profit or loss not necessarily results in week
cash flow. Cash flow statement infects help to understand better the accounts of the company as
9
it is presented by the management. It is shows how operation had been financial during that
period likewise it shows financial resource are employees to generated revenue and ultimately
profits. As general remark, cash flow statements showing the changes in the financial position of
the company within the fiscal year.

According to Stepan, H. Penman, (2004), the objective of these statements is to summarize the
financing and investment activities of the firm.

2.4. To disclose the financial position change during the period Financial Analysis

According to (Stepan H- Penman, 2004), it is explained in the precious parts of the producing
financial statements is to provide information on the users the statements are meaningless unless
and other wise correction of figures on the statement are made. In doing so analysis make users
various instruments ratio analysis is the first in the priority list. Trade analysis cross section
analysis and common site statements are also wacky used methods; the following section this to
provide high light on ratio analysis.

2.4.1. Ratio Analysis

According to Pandey (2001), ratio analysis is a power full tool of financial analysis. In ratio
analysis used as index or yardstick for deviating the financial position and performance or firm
the absolute accounting figure reported in financial statements do not provide a meaning full
understanding of performance and financial position of firm, financial ratios given the analysis
away making creaming comparison of firms. It represents an attempt to standardized financial
information to facilities emending full comparisons.

2.4.1.1. Standard comparison

According to Pandey (2001), the ratio analysis involves comparison useful interpretation of the
financial statement. A single ratio in its self does not indicate favorable or unfavorable condition.
It should be compared with some standard. The easiest to evaluate the performance of firm is to
compare its present ratios with the rest ratio some items future ratios are used as the standard of
comparison. It can be developing from the predicted over performed financial statement. The

10
comparison to part ratios with the future ratio shows the firms relative strength and weakness in
past and present future.

2.4.1.2. Types of ratios

According to Pandey (2001), several ratios can be calculated from the accounting data contained
in the financial statements. These ratios can be grouped in to various classes accounting to
financial activities or function to be evaluated. The parties which warily under talk financial
analysis are short term creditors owners and management, in the view of the requirement of
various users of ratios we may classify than in the following five categories.

- Liquidity ratio
- Dept management ratio
- Asset management ratio
- Profit ability ratio
- Market ratios

2.4.2. Liquidity ratio:-

According to Pandey (2001), the ratio used to judge firm ability to meet short term obligation
from liquidity ratio insight can be obtained in to the present each solvency firm and its ability to
remain solvent in the event of unfavorable condition. There are current commonly used liquid
ratios those are current, quick and absolute liquidity ratio.

A) Current ratio:- is calculated by dividing current liabilities. Indicate the extent to which
those asset expected to convert cash in near future, prepared expensed also in current
asset currently expensed also in current assets currently abilities
Current ratio = current + assets
Current liabilities
B) Quick ratio :- it is calculated by deducting inventories from current assets and then
dividing the remainder by current liability measures the firms ability to pay short term
obligation with ot relying on the sales inventories
Quick ratio = current assets - inventories
Current liabilities

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 C) Absolute liquidity ratio:- this ratio is sometimes refer to as cash ratio. It eliminated as any
unknowns surrounding receivable. In only tests short term liquidity in terms of cash.

Absolute liquidity ratio = cash

Current liabilities (source firm pandy 1981)

2.4.3. Asset management ratio

According to Pandey (2001), an assets management ratio measures how affectively the times
managing its asset those ratios are called turnover ratio because they indicate the speed with
which assets are being converted and turnover in sales. These ratios thus involve relationship
between sales and various assets and pressure that here exist an appropriate balance between sale
and the various assets. These kinds of assets of management ratio are:-

A) Debtors term over and collection period.

Debtors term over ratio = total scale (renew)
Sales
B) Fixed asset term over:- this ratio majors the efficiency of with which firms
initializing its inventories I fixed assets turn over ratios indicates efficient utilization of
fixed asset.
Fixed asset term over ratio = scale
Net fixed asset

C) Total asset turn over:- this ratio reflects how well the company assets are
being used to enervate sales high total assets urn over ratio is suggest indicating
successful management.

2.4.4. Profitability ratios

Profitability ratios reflect the overall performance or the business profit must be compared with
other information to evaluate the firms profitability. There are two types of profitability of ratio.

12
 1) Profit margin ratio:- which indicate the relationship between profit and sales the
important profit margin ratio are gross profit margin ratio and net profit margin ratio (pandy
1982)
2) Rate of return ratio: - which examine the relationship between profit and investment the
important rate of return ratio is return on total asset, earning, power and return on equity.
A) Gross profit margin ratio: - This ratio computes the margin eared by firm after incurring
manufacturing of purchasing costs.
Gross profit margin = Gross profit x100%
Net sale
B) Net profit margin ratio: - gives earnings available for share holder as a percentage of net
sales.
Net profit margin ratio = Net profit x100%
Net sale
According to Pandey (2001), the net profit margin ratio measures the over al efficiency of the
firm in relations, production, administration, selling financing, pricing and tax management.
Return on total assets (ROA):- Also referred tool return on total investment (ROI) this ratio
measures the overall effectiveness of management in generating, the time used assets.

ROA = Net income

Total asset
C) Earning power:- is measurement of operating profit ability.
Earning power = Earning be for interact and tax
Total equity
D) Return on equity (ROF):- measures the return earned on the
owners (both proffered and common share holders) investment in the firm.
ROE = Net income
Total equity
E) Earnings per share (EPS) :- Represents the amount of birr earned on behalf of each
outstanding share of money, stock, earning per share is closely watered by inserting public
EPS = Earning or available for common stock
Number of shares of common stock OH

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 2.4.5. Market value ratio

According to Pandey (2001), market value ratios are the most significant measure of a firms
performance. Since, they measure the performance at the time common stock in the capital
market. The following are the important venation ratio

A) Price earnings ratio:- is an indicator of the firm growth prospects, risk characteristic share
holders corporate regulation and the firms level liquidity.
P/E ratio = market price per share
Earnings per share
B) Market value to book value Ratio:- the market value to book value ratio is measures of
the firms contribution to wealth creation in the society, it is calculated
Market value to book value = market value per share
Book value per share
C) To bias ratio:- this ratio was proposed by same to bin and its calculated
Tobias ratio = total market value
Total asset value

It I similar to the market value to book value ratio except that the nominators consists of
denominators shows as assets at replacement cost rather than book value.

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 CHAPTER THREE

3. Research methodology and design

The methodology was a part of any study of the scientific research in the study area of the
organization.

3.1. Research design

The study used descriptive research design because descriptive research design was helpful to
describe the phenomenon as it exists at present.

3.2. Target population

To conduct this study, the target population of the study was 3 employees who work as financial
analysts on Dashen Bank, Wolaita Sodo Branch.

3.3. Sample size

From the employees of Dashen Bank, Wolaita Sodo Branch, 3 of them are taken as a sample by
using census because of the number of population taken for this study purposes was small, then
this method is the best one to include all of the population.

3.4. Sampling techniques

To collect the required information for this study purposes, the researcher used census technique
because it is helpful to include all of the respondents in the study in order to get the required
information.

3.5. Sources and types of data

In this study, the research used both primary and secondary data in order together relevant
information. Primary data were collected semi-structured interview and researcher designed
questionnaires for this study purposes. Secondary data were collected from published and
unpublished research materials, books, magazines, banks manual, and annual reports.

15
 3.6. Methods of data collection

In this study, the researcher used questionnaires to collect primary data by using close-ended
questions and distributed to Dashen Bank, Wolaita Sodo Branch accountant, auditors and
manager of the branch.

3.7. Methods of data analysis

To analyze the collected data, descriptive statistical analysis techniques were used like frequency
and percentage. After it would be collected data has to be processed and analyses in according to
the proposed plan this would processed implies editing, coding, classification and tabulation of
collected data so that they are manageable for analysis. The term analysis refers to the
competition of certain measures along with searching for patterns of relationship that exist
among data group (Kothari, 2004). The analyzed data were presented by using tables in the
analysis part.

16
 CHAPTER FOUR

4. Data Analysis and interpretation

This chapter deals about the major data analysis, interpretation, and finding of the study.
Relevant information was gathered from the financial analysts of Dashen Bank, Wolaita Sodo
Branch through the close-ended questionnaire.

Table 4.1: Profile of the Respondents

Item Respondent
1 Sex In number In percentage
Male 3 100
Female - -
Total 3 100%
2 Age
18-27
28-37 2 66.6%
38-47 1 33.4%
Above -
Total 3 100%
3 Educational level
Certificate - -
Diploma -
Degree 2 66.6%
MSc 1 33.4%
Above -
Total 3 100
4 Year of experience -
0-2 -
3-5 -
5-7 2 66.6%

17
 Above 7 1 33.4%
Total 3 100%
Source: Questionnaire, 2017.

On above table 4.1 on the level of qualification 2(66%) of respondents were Degree holders. But
1 (33.4%) of respondents were MSc holders and there were no Diploma and above of MSc. Then
it is important analyze the financial statements. On proper manner and also as stated on the
above table their year of experience were between 5-7 respondents were degree holder and above
of 7 years of experience is MSc holder employees on Dashen Bank, Wolaita Sodo Branch.

Table 4.2: Trends of profitability on Dashen Bank, Wolaita Sodo Branch recent year

Item Respondents
Does Dashen Bank, Wolaita Sodo Branch In number In percentage
determine the trend of profitability in recent
years?
Yes 3 100%
No -
Total 3 100%
Source: Questionnaire, 2017.

On above Table 4.2 all respondents 3 (100%) responds, there was the determination of the
profitability trends on the bank while there were no responds said there absence of determined
trends of profitability in recent years. It is important to bank the existence or the determination of
trends of profitability to expand the bank service as stated.

Table 4.3: The strength of financial statement analysis of Dashen Bank, Wolaita Sodo
Branch

Item Respondents in number In percentage

In the Dashen Bank, Wolaita Sodo Branch of
WS branch there is strength of financial
statement analysis?
Strongly agree 2 66.67%

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Strongly disagree - -
Agree 1 33.33
Disagree - -
Neutral - -
Total 3 100%
Source: Questionnaire, 2017.

Table 4.3 Shows 2(66.6%) of respondents responds that there is strong financial statement
analysis of the Dashen Bank, Wolaita Sodo Branch and1 (33.3%) of respondents also said there
is the existence of weak financial statement analysis. As implied above respondents response in
the Dashen Bank, Wolaita Sodo Branch there is strength of financial statement analysis

Table 4.4: The existence of weak financial statement analysis

Item Respondents
In Dashen Bank, Wolaita Sodo Branch they In numbers In percentage
weak financial statement analysis
Strongly agree - -
Agree - -
Disagree - -
Strongly Disagree 3 100%
Neutral - -
Total 3 100%
Source: Questionnaire, 2017.

As shows on Table 4.4 3(100%) of all respondents said there is no weak financial statement
analysis on the bank then. It show the bank have strong and financial statement analysis experts
and experienced personnel on a recording of financial statements.

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Table 4.5: Evaluation of financial statement through only debt ratio

Item Respondents
Does Dashen Bank, Wolaita Sodo Branch In number In percentage
evaluate financial statement analysis by only
Debt ratio
Yes - -
No 3 100%
I dont know - -
Total 3 100%
Source: Questionnaire, 2017.

Table 4.5 shows all respondents said the evolution of financial analysis is not only analyzed by
Debt ratio then on the Dashen Bank, Wolaita Sodo Branch they have another ratio analysis to
analyze the financial statements.

Table 4.6: Types of ratios analysis used by Dashen Bank, Wolaita Sodo Branch

Item Respondents
What type of ratio analysis used by In number In percentage
Dashen Bank, Wolaita Sodo Branch?
Liquid it ratio -
Debt ratio -
Profitability analysis ratio -
Market analysis ratio -
All of the above 3 100%
Total 3 100%
Source: Questionnaire, 2017.

Table 4.6 shows 3 (100%) of respondents said that Dashen Bank, Wolaita Sodo Branch used the
all identified an above ratio analysis to analyze financial statements analysis. Then all ratios are
used on the Dashen Bank, Wolaita Sodo Branch and show its own effect, under companys
financial statements.

20
Table 4.7: The evaluation result of financial statement analysis

Item Respondents
The Dashen Bank, Wolaita Sodo Branch In numbers In percentage
evaluates the financial statement analysis by
using ratio analysis?
Strongly agree 3 100%
Agree - -
Disagree - -
Strongly Disagree - -
Neutral - -
Total 3 100%
Source: Questionnaire, 2017.

As shows on Table 4.7 3(100%) of all respondents said that there ratio analysis methods for
evaluates financial statement analysis on the bank then. It show the bank have strong financial
statement analysis experts and experienced personnel on evaluating the financial statements.

Table 4.8: The period of financial statements analysis

Item Respondents
When Dashen Bank, Wolaita Sodo Branch In number In percentage
analyze their financial statements analysis
Annually - -
Semi annually - -
Quarterly 3 100%
Monthly - -
Total 3 100%
Source: Questionnaire, 2017.

Form above table 4.8. 3(100%) of all respondents said the financial statement analysis analyzed
quarterly. It shows the effectiveness and efficacy of the companys performance.

21
Table 4.9: Appropriateness of financial statement analysis Dashen Bank, Wolaita Sodo
Branch recent years?

Item Respondents
Does the Dashen Bank, Wolaita Sodo In number In percentage
Branch analyze appropriate financial
statements on recent year
Yes 3 100%
No - -
Total 3 100%
Source: Questionnaire, 2017.

Above table indicates the existence of appropriate financial statement analysis occurred on recent
year. It shows the ratios are appropriate to show the reliability of the companys performance or
operation.

Table 4.10: The determines accurate financial statement analysis

Item Respondents
The Dashen Bank, Wolaita Sodo Branch In numbers In percentage
determines accurate financial statement
analysis?
Strongly agree 3 100%
Agree - -
Disagree - -
Strongly Disagree - -
Neutral - -
Total 3 100%
Source: Questionnaire, 2017.

As shows on Table 4.7 3(100%) of all respondents said that there ratio analysis methods for
evaluates financial statement analysis on the bank then. It show the bank have strong financial
statement analysis experts and experienced personnel on evaluating the financial statements.

22
Table 4.11: The analysis all the relevant ratio?

Item Respondents
Is the Dashen Bank, Wolaita In number In percentage
Sodo Branch is analysis all the
relevant ratio?
Yes 3 100%
No - -
Total 3 100%
Source: Questionnaire, 2017.

Table 4.10 Indicates 3(100%) of the respondents responds there the analysis of financial
statement as stated on the objectives of the company. There it shows the corrections of the
financial statements.

Table 4.12: The existence of correctives of financial statement analysis (free from the error
and fronds)

Item Respondents
Does the financial statements analyze by Dashen In number In percentage
Bank, Wolaita Sodo Branch is free from the error
and fronds?
Yes 3 100%
No - -
Total 3 100%
Source: Questionnaire, 2017.

Table 4.10 Indicates 3(100%) of the respondents responds there the analysis of financial
statement as stated on the objectives of the company. There it shows the corrections of the
financial statements and free from error and fronds.

23
 CHAPTER FIVE

5. Summary, Conclusion and Recommendation

5.1. Summary

Financial statement analysis in the subsequent period of the companys according to

properly stated statement by having adequate financial statement analysis.
The reliable financial statement analysis is recorded in Dashen Bank, Wolaita Sodo
Branch to increase the accuracy of financial statements on recent years.
The debt management of the bank the share of creditors which is more than 50% of the
respondents agreed.
In the liquidity ratio which current ratio and cash ratio is less than the properly used.
There methods or techniques that used to eradicate the financial statement analysis is
used to increase the relevance and the accuracy of obtained data.

5.2. Conclusion

Depending upon the finding of the study, the following conclusions were made.

Financial statement analysis is one of the most important functions in the organization for under
taking different purpose such as analyzing and evaluating of financial statement. In any area of
organization activities must needs financial statement analysis consistently. For this research data
gathered by questionnaires from the respondent agree for the existence of enough financial
statement analysis in Dashen Bank, Wolaita Sodo Branch.

Financial analyst of Dashen Bank, Wolaita Sodo Branch enough level of practical experience
and working paper documentation to record the test cared out.

Finally, when the research studied conceder the analysis part, there is some problem in reliability
of the financial statement analysis. The effect of this problem was reduced the accuracy of
financial statement analysis

24
 5.3. Recommendation

In the view of conclusions the following recommendation were made. In the hope that they
minimize the problem identify in the study area

Dashen Bank, Wolaita Sodo Branch determine the trends of profitability as one can be
understand from the analysis is yes that means the existing financial statement analysis are
reliable. As the researcher recommendation the bank uses their documents available for the user
who want to use their document.

As the respondents response the determination of accuracy is occurred. As the researcher re

commands, if the accuracy is occurred, there was some errors exist. Hiring addition personal
with who have experts.

According to the finding of this study, the financial statement recording system is not good. For
this reason, the bank should update the recording system of the bank in order to make it more
updated.

25
References

Daniel G.short Boston (2004). Financial Accounting 4th ed Mc Grew Hill.

Drake, L. (2010). Efficiency and Productivity Change in UK Banking. Applied Financial

Economics Journal.

Eugene F. Brigham and Joel F. Houston. (1999). Fundamentals of Financial Management.

Thomson, Australia.

John N. Meyer (2008). Accounting for Non-Accountants. New York, USA: Pengium Group
Incorporated.

Khan MYPK (2007). Financial management 5thed Mc Grew Hill.

Kothari (2004). Research Methodology and Techniques, 2nd edition. New Age International
Publishing Ltd, New Delhi, Bangalore Kokat and Mumbai.

M.Joseph (2007). Examination of Profitability of Bangladesh Banking Industry, International

Journal of Finance.

Mosich. AN Daniel (2004). Financial Accounting 4thed Mc Grew Hill.

M.Panday. (2001). Financial Management Exercise and Solutions. Vikas Publishing House Pvt
Ltd. New Delhi.

Richard Brealey (1984). Principle of Corporate Finance, 2nd edition, New York MC Graw Hill.

Stephen H. Penman (2004). Financial Statement Analysis and Security Valuation, 2nd edition.
Bostom MC Graw Hill.

26
 APPENDIX

WOLAITA SODO UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE

Dear respondents these questionnaires are for academic purpose. So we need your usual
collaborations the paper entitled financial statement analysis in case of Dashen Bank, Wolaita
Sodo Branch.

Instruction

- Please put x mark on the box provided for closed ended question.

Direction

- No need of writing name

Part I:- Respondent profile

1. Sex male female

2. Age composition
A) 18-27 B) 28-37 c) 38-47 D) above 47
3. Education level
A) Certificate B) Diploma C) Degree D) MSC
above
4. Year of experience
A) (0-2) B) (3-5) C) (5-7)

Part II:- General information

 5. Does the Dashen bank determine the trends of profitability in recent years?
A) Yes B) No C) I dont know
6. In the Dashen bank of Wolaita sodo branch there is strength of financial statement
analysis?
A) Strongly agree B) strongly disagree c) agree
D) disagree E) Neutral
7. In the Dashen bank of Wolaita Sodo branch there is financial statement analysis
weakness?
A) Strongly agree B) strongly disagree C)
agree D) Disagree E) Neutral
8. Does the Dashen bank Evaluate the financial statement analysis by only debt
ratio?
A) Yes B) No C) I dont know
9. What type of ratio analysis is used in dashen bank?
A) Liquidity ratio B) Debt ratio C)
profitability analysis ratio D) Market analysis ratio E) All of the
above
10. The dashen banks evaluate the financial statement analysis by using ratio
analysis?
A) Strongly agree B) strongly disagree C)
agree D) disagree E) Neutral

11. When the Dashen bank analyze their financial statement ratio analysis?
A) Annually B) Semi Annually C) Quarterly
D) Monthly
12. Does the Dashen bank analysis appropriate financial statement in recent year
A) Yes B) No C) I dont know
13. The Dashen bank determines accurate financial statement analysis?
A) Strongly agree B) agree C)
strongly disagree D) disagree E) Neutral
14. Is the Dashen bank analysis All the relevant ratio?
 A) Yes B) No C) I dont know
15. The financial statements analyzed the dashen bank in recent years free from errors.
A) Yes B) No C) I dont know