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CHAPTER ONE 1.

0 BACKGROUND TO THE STUDY In this new era, many mining companies in Ghana are discovering that in order to succeed in a competitive market place, they need to evaluate and improve on their performance. Ghana is richly endowed with natural resources such as minerals and forests. In view of this, the economic growth is to a large extent linked to the utilization of these resources. The historical background of mining in Ghana especially in the gold sector has existed for quite a long time now. Gold from West Africa was traded to Europe at least as early as the tenth century. Most of this gold came by Sahara caravan, the original sources being the kingdoms of Ghana, Mali, and Songhai. Based mainly on native workings, numerous gold deposits, both bedrock and placer, were rediscovered during the latter part of the nineteenth century throughout Senegal, Guinea, Sierra Leone, Ghana, Nigeria, and the other nations of the Gold Coast. (www.minelinks.com) Prestea Sankofa Gold limited is a subsidiary of Ghana National Petroleum Corporation (GNPC). Mining has been conducted at Prestea since 1873, primarily as an underground operation, with more than nine million ounces of gold recorded by the Ghana Chamber of Mines as having being produced during its more than 135-year history. From 1873 to 1965, the current Prestea concession comprised a number of different licenses operated by independent mining companies, which, in 1965, were amalgamated by the post-independence government. Production declined due to lack of sustained investment, and the mine operated at a loss. In 1985, the Government of Ghana secured a World Bank loan to rehabilitate the

mines, but after three years of continued losses, the decision was taken to privatize the mines. (www.gnpcghana.com) In Ghana apart from Prestea Sankofa Gold Limited, there are other thirty eight (38) companies which rely solely on Gold as their primary objectives. Investors and many users of financial statements in the mining industry will want to know the performance of corporate entities to enable them make useful economic decisions. The international Accounting standard Board (IASB) has developed over the years a system of reporting financial information. The primary purpose of the framework is to provide a frame of reference to help the IASB itself in developing new accounting standards and reviewing existing ones. Its impact on accounting practice is therefore through its influence on the standard- setting process. It also has the following purposes; 1. To assist auditors in forming an opinion as to whether financial statements conform with accounting standards. 2. To help preparers of financial statements and auditors faced with new or emerging accounting issues to carry out an initial analysis of the issues involved. 3. To provide a common set of principles for use by standard setters which should reduce the number of alternative treatments allowed by IFRS and therefore facilitate harmonization of accounting practice. The framework is not an accounting standard and does not contain requirements on how financial statements should be prepared or presented. This is governed by accounting standards and the overriding requirement of fair presentation. It is also not the only influence on standard setting. Factors such as legal requirements, implementation issues and industryspecific issues also play a part.

However, it is the frame of reference within which the standard-setting takes place and it contains the definitions and recognition criteria for assets, liabilities, income and expense. Fair presentation requires that these elements are accounted for in accordance with the criteria set out in the framework. In general, resources providers are categorized as either having direct or indirect interest in the various forms of activities the companies undertake. Example, an investor who contributes equity capital to a firm is seeking to maximize the return on that capital, the wage earner is more concerned with the firms ability to provide long-term employment security and the firm can only raise return by investing in assets with high degree of business risk. The last strategy clearly conflicts with the earlier objectives. By way of this, stakeholders especially, investors, employers, tax authorities, trade creditors, bankers and the general public use ratio analysis as one of the several avenues to achieve their objectives. Ratio analysis is essentially comparing the various constituent elements of financial statements through comprehensive calculations of relevant ratios. (Pandey 1999). The element of financial statement which gives details of total receipts and expenses for a particular period, the balance sheet which also consist of assets and liabilities as at a particular period, the cash flow statement and any other relevant notes to the financial statement helps in analyzing the performance of the company. Financial ratios have also proved vital for purposes of financial analysis over several decades ago, with the effect that the traditional ratio analysis techniques have become quite well established in literature. Traditionally, financial analysis, for a long time, depended on accounting performance via profitability measures such as return on assets and net sales to income, among others. These forms of ratios, however, are affected by the fundamental drawbacks that are characteristics of accrual based accounting (Albrecht, 2003).
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This study is as a measure for evaluating corporate performance in the Prestea Sankofa Gold Limited On the contrary, financial ratios help in recording the observable changes from financial statements. At the same time, it also nets out the deception of bookkeeping, hence, it lays more emphasis on what is of more concern to the shareholders, which is the amount of available cash for both investments and operations. For many years now, both Wall Street and Credit analyst experts have been utilizing ratios for purposes of examining performance of companys and also for convenient disclosures. the

Bondholders, especially, those investing in junk bonds, along with specialists in leveraged buyout, make use of financial ratios to ascertain the risks that could be connected to their investments (Paterson & Drake, 1999). The reason for such practice is because free cash flow ratios over time, help individuals to assess the ability of a company to overcome price wars or cyclical downturns.

1.1 STATEMENT OF THE PROBLEM There is considerable evidence that financial ratios are widely used by managers, analysts, Creditors and investors in the mining sector. A survey by Gibson (1982) of the views of financial executives on important issues relating to financial ratios indicated that financial ratios are an important tool in managing a company and analyzing its financial results. . In spite of the usefulness of ratio analysis to stakeholders in mining industries, it is at times fraught with problems. Notably among them is the lack of ratio analysis. Many investment analysts in Ghana find it difficult to determine the actual performance of a particular entity as compared to others for the simple reason that the industry lacks the necessary financial data. The problem is that there is no agreement among managers, accountants or financial analyst about what constitutes real economic profit or how to objectively determine the fair market values of the balance sheet data. In addition, the unique characteristics of individual companies make the development of benchmarks or target profitability difficult if not impossible.

Even though ratios derived from financial statements are used extensively by practitioners and researchers for the purpose of performance evaluation and prediction, little is known about the nature of financial ratio information, i.e., its distributional properties, industry norm or target Selection, the ratios which best represent financial ratio information classification category, and the ratio adjustment process itself. This at time makes it very difficult for useful economic decisions to be taken by investors regarding the entity to be chosen.

1.2 OBJECTIVE OF THE STUDY The objectives of the study are classified as follows; 1.2.1General Objective The main objective of this study is the use of financial ratios as a tool for evaluating corporate performance at Prestea Sankofa Gold Limited. 1.2.2 Specific Objective In order to achieve the general objective stated above, the study focuses on the following specific objectives; 1) To assess major changes in trends via financial ratios at Prestea Sankofa Gold Limited 2) To evaluate the performance of Prestea Sankofa Gold Limited using financial ratios 3) To identify practical problems impending the application of financial ratios in Ghana using Prestea Sankofa Gold Limited as a case. 4) Give recommendations to the problem identified.

1.3 RESEARCH QUESTIONS From the objectives, the following questions can be formulated; 1) What are the changes in trends via financial ratios at Prestea Sankofa Gold Limited? 2) How is the performance of the company measured? 3) What are some of the practical problems impending the application of financial ratios?

1.4 JUSTIFICATION OF THE STUDY This project will be beneficial to the management of Prestea Sankofa Gold Limited in formulating the desirable policy for the company. The finance departments will also find this project beneficial as it provide information on how the company performance is being evaluated using the financial ratios. It will also serve as an information bank for people who will want to know more about Prestea Sankofa Gold Limited and also serve as a guide for assessing management performance. It will also serve as a basis for further research into other operations of the company. Lastly. It is hoped that this research will help in improving the companys performance which in turn help Prestea Sankofa Gold Limited to take into consideration not only the financial statement but the financial ratios in assessing the companys performance.

1.5 METHODOLOGY In this section, the proposed methodology for the dissertation will be elaborated. In order to evaluate the companys performance using ratio analysis, the researcher evaluated data collection, research design, sample and sample technique and research analysis in order to find empirical regularities to make the study feasible.

1.5.1 Data Collection Data for the study were from two main sources and these are primary and secondary sources. With regard to the primary sources, data were collected from Prestea Sankofa Gold Limited and the secondly sources of data for the study also were from annual report and the financial statement of the company. The data collection instruments for the study were questionnaires and interviews. With regard to the questionnaires, they were mixture of both open and closed ended questionnaires and they were directed to finance department of Prestea Sankofa Gold Limited. These were done to get the profile of the company After building the disclosure, further information on financial ratios was extracted from the statistical package for social sciences (SPSS) database after it has been analyzed.

1.5.2 Research Design In more concrete terms, the researcher discussed, here the hypothesis to be tested and the statistical methods to be used. The types of data used were both qualitative and quantitative. The quantitative helped in the calculation of ratios and also in drawing graphs and chats. The qualitative data also helped the general interpretation of what was analyzed.

1.5.3 Sampling and Sampling Techniques

For the purpose of the study, Prestea Sankofa Gold Limited was sampled. Ratio analysis were broadly used along side with the graphs and frequency table to explain the relevant areas of the research undertaken 1.5.4 Research Analysis The researcher in an attempt to analyze the data collected used among others statistical methods tables and percentages. Financial data by way of financial statement of the mining companies from 2007 to 2009 were used as the basis for the analysis

1.6 SCOPE OF THE STUDY The scope of the study is concentrated on Prestea Sankofa Gold Limited. The research is based on the financial performance of Prestea Sankofa Gold Limited within the industry vis -a-vis their liquidity positions, performance indicators and their asset management activities. Besides, the researcher examined the investors interest generated at Prestea Sankofa Gold Limited. These provided some or all of the information needed to meet the research objective, helped the researcher defined and redefined the problem statement, illustrated proper research designs and served as the basis of comparison for interpreting and evaluating every data collected. With regard to the emerging economies, out of 39 Gold mining companies in Ghana, the case of Prestea Sankofa Gold Limited from the mining sector shall be dealt with. The Prestea Sankofa Gold Limited was used because it is one of the biggest mining companies in Ghana
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and their contribution towards the study will make it effective because their primary focus is Gold.

1.7 LIMITATION OF THE STUDY Access to annual report of Prestea Sankofa Gold Limited was a problem for the study since they are vital information of the companies. As a result, gathering these documents from the company proved difficult for the researcher. The main reason being that the mining industries in Ghana are in a fierce competition. However, the Ghana stock exchange was able to provide some of the financial statement but these were without relevant notes of the accounts. In some instances there were variations in figures from the annual reports submitted to the Ghana stock exchange and those obtained from the company itself. Respondents failed to respond to some of the question posed on the questionnaires distributed. In an attempt to deal with the above problems, some research assistance was engaged; The research work was narrowed only to Prestea Sankofa Gold Limited and research objectives were explained to management. To improve upon the validity of information, information received will be cross checked.

1.8 ORGANISATION OF THE STUDY

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The study is divided into five main chapters. Chapter one covers the background information of the study, statement of the problem, objective of the study, research questions, scope of the study, significance of the study, limitations of the study, methodology and the organization of the study. Chapter two reviews related literature of the study, definitions of ratios, uses of ratios, users of ratios and limitations of ratios analysis. Chapter three deals with methods, techniques, sources of the finding and the organizational profile. Chapter four dwells on the data analysis, presentation and findings of the study of the company in the mining industry. Chapter five which is the last chapter consist of summary of findings, conclusions and recommendations

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CHAPTER TWO 2.0 INTRODUCTION Financial statement summarizes economic performance of firms. In order to make use of this accounting information, the users needs to analyze and interpret its meaning. When confronted with financial statement for decision making purposes, it is useful to have a framework of analysis available to make an attempt to extract what is important from the mass of less important data. Financial analysis is a natural extension of an adjust to accounting. Accounting procedures aggregate data and eliminate details in order to present a clear picture of the firm (Glenn V, Henderson et al 1984).

2.1 DEFINITIONS OF RATIOS Ratios analysis has been given several definitions in finance, banking and accounting literature. Some of these definitions are; A) Ratios are relationship between different balances or between account balances and various income statements. (Henderson et al 1984). B) Ratio is simply one number expressed in terms of another number to show the relationship between the two numbers. (Jennings 1993)
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C) Ratio is an expression of the mathematical relationship between one quantity and another. (Engler 1990). Considering what Engler has said about ratios they are tools of analysis that provide clues and symptoms of underlying conditions. D) Welsh(1971) and Zlatkovich (1986) have both shown that ratios are The indicated quotient of two mathematical expressions and the relationship between two or more things

2.2.1 FIANACIAL STATEMENT RATIO Financial statement ratios continue to be the primary means by which managers and other users of financial statement assess the progress of economic entities. There are several of these ratios which assist stock holders in their decision making. However, for the purpose of this study, they are categorized into; a. Liquidity ratio b. Leverage ratio c. Activity ratio d. Profitability ratio e. Market ratio

2.2.2 LIQUIDITY RATIO Liquidity ratio measure a firms ability to meet current obligations. They focus on a companys ability to pay bills when they fall due. In other words they show how solvent a firm is to meets its short term obligations as they fall due ( Mulford, et al 2010). These

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consist of current ratio, that is current assets/current liabilities and quick ratio that is current assets less inventory/current liabilities. The purpose of these ratios are to establish the companies capacity to meet its current liabilities as they fall due and to strip out the slower moving item (inventory/stock) from current assets to measure real short- term liquidity. In their view ACCA( 1987) states that the liquidity ratios and working capital turnover ratios are used to test a companies liquidity, length of cash cycle and investment in working capital. Normally, the acceptable current ratio should not be less than 1.0 and when this happens its signals financial problem. Most analysts consider 2.0 current ratios to be safe and desirable target. (Yiadom 1999)

2.2.3 LEVERAGE RATIOS Leverage ratios or debt management ratios are the extent to which a firm uses debt in financing its operations. It has three implications according to Brigham (1995); i) By raising funds through debt, shareholders can maintain control of a firm while limiting their investment. ii) Creditors look to equity or owner supply funds to provide a margin of safety, so if the stockholders have provide only a small proportion as the total financing the risk of the enterprise are borne by its creditors. iii) If the firm earns more investment financed borrowed fund than its pay interest, the return on owners capital is manifested or leveraged. Equally, they shows the proportions of debt and equity in financing the firms assets, thus, relative proportion of debt and equity used to finance the assets of an entity.
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Principally, there are two types of leverage ratios which are debt ratio and equity ratio. Mathematically, A) Debt ratio = Total Debt Total Assets B) Equity ratio = Total Debt Total Equity Essentially, the goal is to borrow and invest the funds in business activity that produces a greater return than the interest that has to be paid on borrowed funds. It also attempts to measure the long-term solvency of the company (Brigham1995), advocated that the financial leverages can raise the expected rate of return to shareholders in many ways; 1) Since interest is deductible the use of debts lowers the tax bill and leaves more of the firms operating income available to its investors. Notably, high price earnings ratio may indicate that investors expect high dividend growth or the stock has low risk and investors are content with long term prospective return and the company is expected to achieve average growth while paying out a high proportion at earnings (Brealy and Myres 1999). 2) Dividend per share i.e. dividend proposed/outstanding shares is the portion that is available to shareholders. 3) Dividend yield i.e. dividend per share/stock price. It is used to compare the different investment alternatives. 4) Dividend payout ratio i.e. dividend per share/ earnings per share, between its ordinary shareholders and re-investing them in the firm. High growth firms typically re-invest their earnings instead of paying them out resulting in low pay-out ratios.

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5) It must be noted that a higher pay out ratio indicates a slow growth. Therefore if a companys earnings are particularly variable management is likely to play by setting a low average pay-out ratio. The purpose of market ratio are the measurement of the esteem in which in which they are held by investors.

2.2.4 ACTIVITY RATIO Activity ratios measure company sales per another asset account thus the most common asset accounts used are accounts receivable, inventory, and total assets. Watson and head (2010, p.49) states that activity ratios shows how efficiently a company has managed short-term assets and liabilities. Activity ratio also evaluates how well the company manages its assets. Besides determining the value of the company's assets, you and your client should also analyze how effectively the company employs its assets. In his view Doyle (2010) states that there are three common assessed activity ratios and these are trade receivables turnover ratio, inventory turnover ratio and trade payable turnover ratio. According to Waston and Head (2010) trade receivables turnover gives the average period of credit taken by customers. Inventory turnover ratio also shows how long it takes for a company its inventories into sales and also trade payables gives the average time taken for suppliers of goods and services to receive payment. Mathematically, the three types of activity ratios are as follows; A) Trade receivables turnover ratios = debtors * 365 Credit sales B) Inventory turnover ratio = inventory * 365 Cost of sales
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C) Trade payables ratios

creditors *365 Cost of sales

The information used to calculate an activity ratio is found on a companys balance sheet or income statement. Doyle (2010)

2.2.5 PROFITABILTY RATIO

According to Watson and Head (2010) profitability ratio indicate how successful the managers of the company been in generating profit. To them return on capital employed is often the primary ratio. In their view weygandt et al (2005) states that profitability measures the income or operating success of an enterprise for a given period of time. They went to say that profitability affects the liquidity position and the firms ability to grow. Profitability is used as the ultimate test of management operating effectiveness. Weygandt et al (2005)

There are four types of profitability ratios that are used to determine the profit of a company and these are ; Sales growth which measures the changes in growth of a rate of firm sales thus changes in turnover/previous years turnover multiply by hundred.

Gross profit margin which also reflect the efficiency with which management produces each unit of product. It also measure the percentage of each money of sales that results in net income. Weygandt et al (2005). It is computed by dividing gross profit by turnover multiply by hundred.

Return on assets. This also measures the operating efficiency of the firm. Thus, net profit before tax/total assets. Doyle (2010).

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Return on equity also measures how well the company has used the resources of its owners. This ratio shows how many dollars of net income were earned for each dollar invested by the owner. Weygandt et al (2005). Thus net profit before tax /net worth. An increase in these ratios is viewed as a positive trend. Doyle (2010).

2.2.6 INVESTMENT/MARKET RATIO

These are the ratios which help equity shareholders and other investors to assess the value and quality of an investment in the ordinary shares of a company Ainsworth et al (1996). Market ratio which is also known as the investment ratio does not only regard information in the companys published account but also the current price, and the fourth, fifth and sixth ratios all involve using share price according to ACCA(1998). In their view wood and Sangster (2008) states that the purpose of this ratio is to indicate how well a company is performing in relation to the price of its shares and other related items including dividends and the number of shares in issue. The usually calculated are explained below; Dividend per share. This indicates the dividend received by each ordinary shareholder. It shows the proportion of profit on ordinary activities for the year that is available for distribution to shareholders and what proportion will be retained in business to finance future growth. Ainsworth et al (1996). It is computed mathematically as; Dividend per share () = proposed dividend *100 Number of shareholders Dividend yield. This ratio measures the real rate of return by the dividend paid to the market price of a share. Wood and Sangster (2008). This is compared to the yield available on

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alternative investments to help investors evaluate the extent to which their investment objectives were met. The average dividend yield on common market stocks has historically been in the range of 3% to 6%. Ainsworth et al (1996). It is computed mathematically as; Dividend yield = dividend per share * 100 Market price per share

Earning Per share. According to Ainsworth et al (1996) earning per share measures the net income earned on each share of common stock. They went on to say that it is most frequently quoted measure of firms performance in the financial press and it is required disclosure on the face of the income statement. It is computed by dividing the net income by the number of shareholding. Price earnings. This ratio relates the earning per share to the market price of the shares and is a useful indicator of how the stock market assesses the company. It is also useful when a company proposes an issue of new shares, thus it enable potential investors to better asses whether the expected future earnings make the share a worthwhile investment. Wood and Sangster (2008).

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2.3 USES OF FINANCIAL STATEMENT RATIO Ratio analysis of financial statement is used widely with sophisticated techniques by investors and other stakeholders. Notably, the uses of financial ratios according to (welsch et al 1986) are; a) Making investment and credit decision b) A tool of communicating economic situation of entity from obsolete figures in financial statement. c) A predicting model to project whether a firm would fail or otherwise d) Evaluating the stewardship of management by way of their performance over a given period of time. e) Assessing efficiently and effectively the assets of the company have been employed or used over a period of time. f) Assessing the risk association with investment in a given company. g) Inter-firm comparison (Yiadom 1999). h) Trend analysis. i) Estimating marketing risk.

2.4 USERS OF FINANCIAL STATEMENT RATIOS The main users of financial statement ratios include shareholder and potential shareholders, creditors, tenders, government for taxation and statistical purposes particularly through their trade unions as well as management.

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The interest of the various parties or shareholders has been summarized in Table 1. Table.1. Main users of financial statement ratios. Parties with immediate interest Types of ratios

Potential suppliers of goods on creditors, Liquidity or credit risk. Ratio indicate how tenders. Example bank managers, debenture well equipped the business is to pay its way. holders and management Shareholders (i.e. actual and potential) Profitability: how successful is the business potential takeover bidders, lenders, trading. tax

management,

competitive

firms,

authorizes and employees. Shareholders (actual and potential) potential Users of assets: how effectively are assets of takeover bidders, tenders, management, firms utilized?

competitive firms, employment. Shareholders (actual and potential) potential Capital structure: how does the capital takeover bidders, tenders, management, structure of the firm affects the cost of capital and return to shareholders

creditors in assessing risk.

Shareholders (actual and takeover bidders, Investment: show how the market prices for a management). share reflected on the companys

performance. Source: Frank wood vol.2, sixth edition, page463.

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2.5 LIMITATION OF FIANACIAL STATEMENT RATIO In spite of the wide use of financial statement ratios, this technique has a number of limitations. Due to these limitations, ratios must be interpreted with great care. Some of these limitations according to Pandey (1991) are; I) When the data which ratios are based is on historical book value it does do not reflect; a) Price level effects b) Current market values. These have the effect of inflation/deflation on certain items in the financial statement of companies. Notable examples are; 1) It increases the nominal value of work in progress and inventory profits are not a real income except to the extent that the inventory appreciates faster than general price level. 2) As inflation progress the net book value of fixed assets become more and more out of fixed data i.e. the book value understates current value of replacement cost. Depreciation schedules that are based on book value may provide misleading picture of change in current value of the assets of the company. 3) It also has effect on the net profit of companies that borrow. Lenders are backed in inflation currencies so they demand a higher interest on their loans

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Brigham (1995) also outlines limitations of ratios which are; I) Ratios represent average conditions that exist in the past. They are based on historical data that incorporate all the peculiarities of the past. The financial analysis is interested in what happens in the future whiles ratios indicate what happens in the past. Management of the company get information about the companys plans and policies and therefore is able to predict the future better than the outsider. II) The method of computing each ratio is not standardized. Therefore the computation can be influenced by data selections choice. Thus, it is difficult to decide on proper basis of comparison. III) Situations of two or more comparison are not the same. Similarly the factors influencing the companies in one year may change in another year. Thus the comparison of the ratios of two or more companies are difficult and become meaningless when they are operating under different situations such as product lines, methods of finance and geographical locations. Also the uses of different accounting methods obscure inter-firm comparison. IV) The use of alternative accounting method may also have significant effect on the use of financial ratios. For instance the use of first-in first-out (FIFO) versus lastin first-out (LIFO) stock valuation purposes and /or the use of straight line versus accelerated depreciation. V) Change in accounting estimate and principles such as a change in FIFO to LIFO may affect the ratio of the year of change. VI) All other investors have the same data available and can compute the same ratios. Studies have shown that the market vary quickly and absorbs this information. As
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a result, it is extremely difficult to consistently earn above average returns on stock investments by relying on publicly available information. This is why probably there is excessive reliance on ratio analysis. Welsch and Latkonch (1986). VII) Firms can employ window dressing techniques to make their financial statements look better than they really are. VIII) A firm may have some ratios which look good and others which look bad making it difficult to tell whether the company is, on balance, strong, or weak.

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CHAPTER THREE METHODOLOGY AND ORGANIZATIONAL PROFILE 3.0 Introduction This chapter deals with methodology of the study. Thus it describes the procedures, techniques and methods adopted in collecting the data and analyzing the data. It is presented in the following order: research design, sources of data, target population, sampling techniques, sampling and sampling procedures and data analysis. It also presents the organizational profile of Prestea Sankofa Gold limited. The organizational profile includes the brief history, vision, mission, objectives and as well as the organizational structure. .

3.1 Research Design The research design that was adopted was descriptive and explanatory. The research was conducted by using descriptive survey to evaluate the financial performance of Prestea Sankofa Gold Limited using financial ratios. This design was employed because it provides useful information from the three years financial statement of the company under study. The study used self administered questionnaire to obtain information about the profile and the financial administrators view on the financial statement. This design is important because it would help the researcher to find views on the financial statement as they occur in their natural setting

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The study collected both quantitative and qualitative data to answer the research questions. These approaches were used because, quantitative aid the researcher in analyzing the financial statement of Prestea Sankofa Gold Limited using the financial ratios while the qualitative support the researcher in interpreting the financial statement of the study

organization. The study exploited both primary and secondary sources of information. The primary source comprised of a structured questionnaires to elicit pertinent responses from the respondents. The instrument used in this study is the questionnaires and financial statement.

3.2 RESEARCH METHODOLOGY 3.2.1 Source of Data/Data collection Procedure. Data were collected from both Primary and secondary sources for the study. This helped the researcher to compare the respondents view with the literature available to the study. 3.2.1.1 Primary Data Questionnaires were administered to the finance department of Prestea Sankofa Gold Limited to provide data relevant for the study. Closed and open ended questions were administered in the form of interview to gather data for the organizational profile and the financial management of the company. 3.2.1.2 Secondary data Three years annual reports of the company were used as the secondary source of data collection. This will help the researcher in calculating the financial ratios and interpreting

the financial statements of the company.

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3.2.2 Target Population The target population for the study is the finance department of Prestea Sankofa Gold Limited. 3.2.3 Sampling and Sampling Procedures The study covered Prestea Sankofa Gold Limited financial management department. Prestea Sankofa Gold Limited was chosen out of a variety of mining companies in the country to enable the researcher do a very thorough work since interpretation of financial ratios is severe in the country. Since it is not economically feasible, among other constraints to contact all the financial department of the company, sampling size of (5) five respondents was included in the study.

3.2.4 Data Analysis Data collection from the sample was put into qualitative and quantitative analysis. Statistical tools such as percentages, tables and graphs were employed to analyze the data. Statistical Package for social sciences (SPSS) and Microsoft Excel were used for all the analysis.

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3.5 ORGANISATIONAL PROFILE OF PRESTEA SANKOFA GOLD LIMITED 3.5.1 History

Prestea Sankofa Gold Limited is a subsidiary gold mine of Ghana National Petroleum Corporation (GNPC), which was incorporated in 1994 as a joint venture between SAMAX Gold Resource and GNPC. The company, as the name implies in Ghanaian parlance Sankofa meaning go back for it, was set out to extract gold from tailings and low grade waste from over 100 years of mining activities in Prestea. The technology has attracted a lot of interest in the industry. The company is currently doing well.

In 1998, SAMAX ceded its interest to GNPC. As a result of this, GNPC now owns 90% of the shares in the company with Government of Ghana taking the remaining 10%.

GNPC is evaluating the potential of the company with the aim of selling it out. This is in response to Government desire to see GNPC focus on petroleum exploration and production activities only.

3.5.2 Vision

To be a leading global mining company whose operations have a profound impact on the quality of life of the people of Ghana.

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3.5.3 Mission

To lead the sustainable exploration, development, production and disposal of the Gold resources of Ghana, by leveraging the right mix of domestic and foreign investments in partnership with the people of Ghana.

3.5.4 Values

Core values which we hold dear to the company are professional, respect for talent, reward of merit and encouragement of teamwork. The Corporation also encourages and rewards creativity and innovation. Prestea Sankofa Gold limited is committed to self-discipline and to the protection of Ghana's interest at all times. However the company has not reported any data for evaluation for social responsibilities.

3.5.5 Objectives

1.

To accelerate the promotion of mining activities to ensure early commercial discovery

and production 2. To undertake the appraisal of existing mining discoveries to ensure production to meet national requirements 3. To ensure that Ghana obtains the greatest possible benefits from the development of its Gold mining resources

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4. To obtain the effective transfer to Ghana of appropriate technology relating to mining operations 5. To ensure the training of citizens of Ghana and the development of national capabilities in all aspects of Gold mining operations

6. To ensure that Gold mining operations are conducted in such a manner as to prevent adverse effects on the environment, resources and people of Ghana especially Prestea township.

3.5.6 Organizational structure

At the inception of Prestea Sankofa Gold Limited in 1994, technical assistance was sought from GNPC and SAMAX, the parent companies under sponsorship for the preparation of a strategic organizational plan and recommendations for institutional capacity building. The organizational plan was approved by the Board of Directors and it involved five main functional divisions and four staff departments.

A review of the structure is currently being undertaken to incorporate a wider scope of activities consistent with their current strategy.

Prestea Sankofa Gold limited has a seven-member Board of Directors appointed by the GNPC and six department which exercises supervisory responsibility over the Corporations operations

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Diagrammatically, the organizational structure for Prestea Sankofa Gold Limited is as below;

Fig. 1

BOARD OF DIRECTORS

MANAGING DIRECTOR

HUMAN RESOURCE DEPARTMENT

FINANCE/ ADMNISTRATION DEPARTMENT

PLANNING AND EVIRONMENTAL ENGINEERING DEPARTMENT

LEGAL INTERNAL AUDIT DEPARTMENT

GHANA MINING WOKERS UNION LOCAL DEPARTMENT

GEOLOGY/EXPLORATION/MI NING PLANT AND PROCESS DEPARTMENT

ACCRA OFFICE MAILS

FORMAL STAFF MAILS

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CHAPTER FOUR DATA ANALYSIS, PRESENTATION AND DISCUSSION 4.0 INTRODUCTION In this chapter, the researcher report the results obtained from the field. The reports are in the form of analysis and interpretation of results. The analysis is important as it forms the basis for conclusion and useful recommendations. Financial statements report both a firms position at a point in time and on its operations over some period. However, the real value of financial statements lies with the fact that they can be used to help predict the firms future earnings and dividends. From an investors point of view, predicting the future is what financial statement is about, whiles management uses it to anticipate both future condition and more notably serves as a starting point for planning actions that will influence course of events. Brigham (1995). On the basis of these, the researcher present in this section the interpretation of the relevant ratios from the audited financial statement of Prestea Sankofa Gold limited within the mining industry covering 2007 to 2009.

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4.1 GUIDES IN ANALYSING AND INTERPRETATING THE FINANCIAL STATEMENTS The following are the guides used for analyzing the financial statement of Prestea Sankofa Gold Limited; 1. Examination of the auditors report. 2. Analysis of the statement of accounting policies included in the notes to the financial statement. 3. Examination of the financial statement as a whole including notes and supply schedules. 4. Application of the analytical approaches, example ratio analysis. 5. Search for important supplement information.

4.2 AVILABLE OPTIONS OF WHICH THE RATIOS COMPUTED WERE COMPARED WITH The ratios computed were compared under the areas; 1. The results achieved previously by the company (that is Prestea Sankofa Gold Limited). 2. Results achieved by other companies in the same industry. 3. Predetermine standards or budget of the company.

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4.3 SIGNIFICANCE OF FINANCIAL RATIOS COMPUTED 1. The Ratios computed assesses the performance and financial condition of the company (Prestea Sankofa Gold Limited) for the period of 2007-2009. 2. The ratio also assesses the performance and financial condition of the company with other similar firms like Bogoso Gold Limited, Goldfields Ghana Limited. 3. The Ratios computed makes better and easier comparison than absolute figures. 4. The ratios are useful in summarizing the information in published accounts and in directing the users attention to key issues which may vary from company to company. 5. The ratios are also useful in the management process of forecasting and planning. 6. Shareholders of the company could use it to assess the efficiency of management of the firm and make recommendations to the board at annual general meeting to maintain or replace them. 7. The use of ratios makes it possible for a large volume of accounting data to be conveniently summarized, thus making it easy to assimilate. 8. The ratios analyzed will enables Prestea Sankofa Gold Limited to asses it solvency, profitability and to know whether it is overtrading or under-trading.

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4.4 INTERPRETATIONS OF THE FINANCIAL RATIOS OF PRESTEA SANKOFA GOLD LIMITED. 4.4.1 PROFITABIILITY RATIOS To stay in business, a company must generate reasonable profits. A high profit is obviously important to interested parties especially creditors, shareholders and management. Shareholders are interested in high dividend. A higher ratio shows an indication of the company to pay investors with appropriate returns. The profitability ratios computed are shown below; Figure (2) Column chart showing profitability Ratio

100 90 80 80 61 63

92 75 GROSS PROFIT MARGIN (%) NET PROFIT MARGIN (%) 40 39 37 RETURN ON ASSETS (%) RETURN ON CAPITAL EMPLOYED RETURN ON EQUITY (%)

PERECNTAGES

70 60 50 40 30 20 10 0 2007 21.6 43 30 44

60

20.2 12.6

2008

2009

NUMBER OF YEARS
Source: Field Data June 2011

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From figure (2), the Gross Profit margin of Prestea Sankofa Gold Limited has deteriorated over the three years having reduced from 43 % to 39%. This suggests that, there has been a change in the structure of Gold sold or in the percentage of mark-up on costs. That is the cost of operation example, hiring of LOWBEDs machines for movement of an excavators between working sites and increase in price of man waste from Galamsay operators. Net profit has also decrease form 21.65% to 12.6%. This indicates that Prestea Sankofa Gold Limited has increase their administration expenses and also as a result of changes in the depreciation policy on the companys fixed assets. Return on assets although increased from 30% to 61% in 2007 and 2008 respectively has reduced to 37% in 2009. This is as a result of management disposing some part of their fixed assets and purchasing additional new assets in 2009 which though increased their sales value did not take effect immediately which led to the companys decline as a result of management inability to fully utilize the machine during the 2009 financial year. Return on capital employed has also increased form 43% to 75%. This is as a result of management maintaining a favourable depreciation of 33.33% and also implementing an accounting policy in capitalizing exploration cost that is capitalization of exploration costs are written off over a five year period from the date commercial production commences. Return on equity for Prestea Sankofa Gold Limited also increased from 60% to 92%. The increase suggests efficient control over operating expenses. This can also lead to increase in equity financing and the resultant decrease in interest expenses.

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4.4.2 RATIOS MEASURING SHORT-TERM FINANCIAL STRENGHT (LIQUIDITY RATIOS) Liquidity ratios are used to judge a firms ability to meet short term obligations as and when they fall due. They compare the current assets available for meeting current debt obligations. From the ratios, much insight can be obtained into the present solvency in the event of adversities .The liquidity ratios, which the researcher computed for the period under review, are; Figure (3) Column chart showing liquidity Ratio

1.2 1.06 1 0.96 0.81 0.8 0.6 0.4 0.4 0.2 0 2007 2008 2009 0.76 0.81 CURRENT RATIO 0.51 0.55 CASH FLOW RATIO QUICK RATIO 1.06

NUMBER OF TIMES

NUMBER OF YEARS Source: Field Data June 2011 The current ratio of Prestea Sankofa Gold Limited has increased from 0.40:1 to 0.81:1 yet still the company does not have sufficient current assets to cover its current liabilities. This is

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to suggest that the company records a poor working capital management which translated into lower cash level, lower receivables, probably due to non-cash transaction. Quick ratio of Prestea Sankofa Gold Limited has also increased but due to the size of the company, a sufficient amount of liquid assets is not available to meet the demands of the firms present current liabilities. This was as a result of Prestea Sankofa Gold Limited increasing their consumption rate to 3%. That is Prestea Sankofa limited was working on plant rehabilitation project which is still in progress. Cash flow ratio has also increased from 0.51:1 to 1.06:1. This is to propose that although it increased, they were not able to generate cash as against their current liabilities. This was due to an increased in their investing activities like fixed assets purchased and exploration cost incurred. Based on these, one can easily say that Prestea Sankofa Gold Limited is managing its available cash resources fairly but it is of high concern to stake holders due to the nature of its business which demands significant amount of liquid resources.

4.4.3 ACTIVITY/EFFICIENCY RATIOS (MANAGEMENT EFFICIENCY) These ratios show how effective management utilized the resources of the business to generate income. The aim of efficiency ratios is to assess how management utilizes the available resources at their disposal.

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Figure (4) Column chart showing Activity/Efficiency Ratio

100 90 80 74

93

TIMES/DAYS

70 60 50 40 30 20 10 0 2007 6.4

59 50 43 25 11.62 8.63 5.8 10.44 10.27 3.6 2008 13.98 1.17 2009

TOTAL ASSETS TURNOVER(TIMES) TRADE RECEIVABLE DAYS TRADE RECEIVABLES TURNOVER STOCK TURNOVER TRADE PAYABLES DAYS

NUMBER OF YEARS Source: Field Data June 2011 From figure (4), the asset turnover of Prestea Sankofa Gold Limited has decreased drastically over the three years from 6.4 times in 2007 to 3.6 times in 2009. The assets turnover ratio has improved because the company has been able to dispose off its obsolete assets. Although there has been substantial addition to investment in assets, there has also been a corresponding increase in turnover and profit. It might also suggest that there is a decline in the efficiency with which assets are being used or additional new assets purchased during the year as a result of the increase in sales might not yet have been put into full use. However, Trade receivable has reduced from 74 days to 50 days. This suggests good performance in terms of debts collection and has also help management to be able to increase their receivables turnover. This shows that the management of Prestea Sankofa Gold Limited is able to control the Galamsay operators within the community.

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To add to the above, the trade payables have also reduced from 93 days to 25days in 2009. This suggest a good sign of company improving on it credit basis from suppliers. This will create a good relationship with the company suppliers. Again, their stock turnover has increased from 11.62 times to 13.98 times in 2009. This means that there is higher demand for Gold on the international market. Technically, Prestea Sankofa Gold Limited has improved its efficiency position over the past three years but not to its maximum.

4.4.4 RATIOS MEASURING LONG-TERM FINANCIAL STRENGHT (LEVERAGE/GEARING RATIOS) Leverage ratios or debt management ratios measures the extent to which a firm uses debt financing. One of the fundamental decisions that a company has to take is gearing, which is the ratio of the companys debt to its equity. This ratio enables the company to establish an appropriate balance between the return on capital and the cost of obtaining debt.

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Figure (5) Column chart showing Gearing Ratio

100 90 85.9 80 70 60 50 40 30 20 10 0 2007 2008 37.2 29.9 25.5 13.6

87.5

PERCENTAGES

DEBT RATIO (%) EQUITY RATIO (%)

2009

NUMBER OF YEARS Source: Field Data June 2011 Prestea Sankofa Gold Limited is not highly geared but equity financed. The debt ratio has decreased despite the fact that long term debt has risen during the period because some of their assets were revalued. This revaluation was not considered as it took place at the end of 2009. There is a clear indication that there has been an improvement in equity ratio from 2007 to 2009 and a remarkable decrease of debt from 37.2 down to 13.6 in 2009. From this, the high increase in equity financing means, the company (Prestea Sankofa Gold Limited) will be able to survive in a lean period of trading than highly geared company which will make interest payment irrespective of profit level and also indicate that Prestea Sankofa Gold Limited would be able to cover up early when the company is wound up.

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4.4.5 INVESTMENT/MARKET RATIOS As indicated earlier in the literature review the ratio show how highly a firm is valued by investors. The market ratios considered are dividend per share, dividend yield, price earning ratios and dividend payout ratio. Figure (6) Column chart showing Investment/Market Ratio

PERCENTAGES/CEDIS

5 4 3.2 3 2 3.05 3.23

4.66

4.87

3.231

DIVIDEND PER SHARE() DIVIDEND YEILD (%) PRICE EARNINGS RATIO

1.1 1 0 2007 2008 0.356 0.63 0.01 0.73 0.358 0.359

1.22 0.74

EARNINGS PER SHARE() DIVIDEND PAYOUT RATIO (%)

2009

NUMBER OF YEARS Source: Field Data June 2011 Prestea Sankofa Gold Limited over the period under consideration recorded dividend per share higher over the past three years, this means that higher profit levels is likely to attract investors. This is as a result of the company experiencing a free zone tax system implemented by the government which has drastically increased their profit margin hence, the increase dividend per share.

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However, their dividend yield has reduced marginally although there is an increase in dividend per share. This is as a result of the company changing its dividend policies. That is directors cannot recommend the payment of dividend whilst there remains an adverse balance on the surplus account. The price earning ratio has also increased from 3.05 in 2007 to 4.87 in 2009. This indicates a good sign for investors in the company. This also shows that management has put in place strategies to pay it investors early to attract their investment. The earning per share measures their profitability level and with the upward trends from GH0.63 to GH1.22 indicates a good sign of investment policies such as good retention policy on dividend per share, good stock market performance on earning yield and dividend yield, better pay back period for investment made in their shares, higher ratio in the companys growth in the future expectation on price earnings ratios and sustainable level of dividend in future on dividend pay out. Performance is really viable as well as profitability because the investment ratios gives a positive figure of good management policies on dividend payment to shareholders since it is use as a proxy for investors assessment of the companys ability to generate cash flows in the future.

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CHAPTER FIVE SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION 5.0 INTRODUCTION This final chapter covers a summary of findings, conclusion and recommendations based on the study.

5.1 SUMMARY OF FINDINGS Based on the analysis, it seems that the companys profitability ratios were not encouraging due to higher level of operation on administration expenses. Management desire to cut down operational expenses during an interview is a welcome idea. The liquidity position of the company seems to be deteriorated. This is because Prestea Sankofa Gold Limited could not meet the acceptable standard from the point of view of investment analyst. The researcher found out that, the management were finding it difficult to control working capital variables, hence the detoriation in liquidity ratios Under the activity ratios, with specific reference to trade receivables and payables, the researcher observed that Prestea Sankofa Gold Limited were able to reduce their trade receivables and turnover respectively although their stock turnover increased. This means that the company looks viable, but there are several other factors which needs to be taken into consideration before investing in the company. Example Encroadiment of concession by Galamsay operators which affect profitability, high cost of mining equipment etc.

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However, one can say that Prestea Sankofa Gold Limited has improved its efficiency position over the past three years but not to its maximum. In the same stratum, leverage ratios were low, which is a sign of a company being heavily dependent on equity sources of funding and is an indicator of good performance. Seeking of bigger sources of funding might be a requirement for a substantial capital project. Provided the entity is able to generate enough income to service regular interest payout and have some left for the owners. This will result less problems for the company. Furthermore, it is noted that Prestea Sankofa Gold Limited has favourable market indices to some extent. This is manifested in the dividend payout ratio, a seemingly favourable growth market price per share and the trend in sales growth over the period. The increase in share price will motivate investors to buy more of their shares. Thus Prestea Sankofa Gold Limited has a potential of acquiring the funds of investors in the mining companies. Reaction to the question as to whether changes in ratio signal poor performance or otherwise might not have a straight forward approach. For instance, a fall in dividend pay out ratio is not necessary signaling poor performance to an entity. It might be rather be retention of earnings to undertake future expansions. This is to conclude that Prestea Sankofa Gold Limited will expand in the near future.

5.3 CONCLUSION The researcher is of no doubt that, the processes employed in the cause of the research would have a positive impact on the financial performance of the firm. This in effect will drastically reduce the problem mining firms in general face when interpreting their financial statements

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and this will further enhance effective analysis of the concept, financial ratios as a tool for corporate performance if all the interventions are used.

5.3 RECOMMENDATIONS In analyzing the financial statement of the Prestea Sankofa Gold Limited, the geographical location of the company should be taken into account. 1. The researcher recommends that the Prestea Sankofa Gold Limited should institute measures to reduce their credit days period and stock turnover to an appreciable level to forestall the situation where creditors will loose confidence in their integrity. 2. If possible Prestea Sankofa Gold Limited should comply with the accounting policies and conventions. These should be consistently used until the need arises for any modifications that would lead to a better presentation of the financial statement. 3. The researcher suggests that it would be ideal for Prestea Sankofa Gold Limited to always maintain their financial year on the same date to facilitate fair analysis of their operation over a specified period of time. 4. The researcher suggests that, the company should put measures in place on how to control the Galamsay operators in the community and also improve on their social responsibilities. 5. Judging whether a company is worth investing in, stakeholders need not always rely on quantitative data for their decision making but should equally take into account qualitative and other economic factors such quality of management, inflation, exchange rate policy of the government etc in order to prevent investors from investing in a poor organization.

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6. The researcher also suggests that, the company should also take into account the changes in accounting estimates and policies used in an accounting period. 7.The researcher suggest that the topic should be studied by other researchers in the same industry but different companies in order to compare and contrast the favourable financial ratio tools that should be use in the industry to improve performance.

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BIBLIOGAPHY ACCA (1987), Advance Accounting Practice. London; BPP Publishing Ltd. ACCA (1998), The Accounting framework, London: BBP Publishing limited. Ainsworth P, Deines D, Phimlee D.R, Larson C.X ( 1996), introduction to Accounting ,London: Irwin Books Team. Albrecht, W. S. (2003) Fraud Examination Mason, Ohio, Thomson and South- Western. Altman, E (1986), Handbook of corporate finance New York; McGraw-Hill Anderson, P. (1996) Are you ready for ratio analysis The Accounting journal .Ed. Julia Iroine Vol. 118.Issue number 1237 Brealey, A.R and Myers C.S, (1991). Principles of corporate finance New York; McGrawHill Brigham E.F, (1995). Fundamentals of financial management. Orlando; Dryden Press Dolye .K.M (2010). What is an Activity ratio. London: Conjecture Corporation Engler, C, 1990. Managerial Accounting. Boston R.R. Donnelly and Sons Company Ezra, S and Pringle J.J. (1980), An introduction to financial management. California: Good Year Publishing Company. Ghana Mineral commission (2000) EU funded Mining Sector Support Programme to Ghana. http://www.minelinks.com [Accessed 20 June 2006] Ghana National Petroleum Corporation, (2010) media statement on crude oil

http://www.gnpcghana.com[accessed 08 March 2011]


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Gibson, C.H. (1982). How industry perceives financial ratios. Management Accounting, 4, 13-19. Henderson, V, Glenn, Jr.(1984), An introduction to financial management 1984 Addison Wesley Publishing Company Jennings, A.R. (1993), Financial Accounting. London Guerusey Press

Marfo- Yiadem E.(2004) Essentials of financial management; German Publication

Mulford, Charles W., Comiskey, Eugene E (2010). The Financial Numbers Game: Detecting Creative Accounting Practices

Pandey, I.M, (1999) financial management. New Delhi. RSP imaging system Paterson, P. P., & Drake, P. P. (1999). Analysis of financial statement. London: Wiley. Van Horne, C.J.(1983) Financial management and policy. New Jersey Prentice-Hall Waston, D and Head, A (2010p.49). Corporate finance: principles and practice.5th ed., London: Pearson education limited. Welsh, N and Zlatkovich.(1986) intermediate Accounting :Webster New College Dictionary Illinois Weygandt J.J, Kieso D.E, Kimmel P.D (2005). Accounting principles 7th Ed, Canada: congress cataloging. Wood F and Sangster A (2008), Business Accounting 2, England: Pearson Wood, F. (1993) Business Accounting 2. England; clays

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APPENDIX A KWAME NKRUMAH UNIVESITY OF SCIENCE AND TECHNOLOGY SCHOOL OF BUSINESS DEPARTMENT OF ACCOUNTING AND BANKING & FINANCE INTERVIEW GUIDE I am carrying out a research on the topic financial ratios as a tool for evaluating corporate performance: The case of Prestea Sankofa Gold limited. This research is being conducted in partial fulfillment for the award of a degree in Bachelor of Science in Accounting and your company has been selected for this study. I would be grateful if you could complete the questionnaires to enable me complete the research. I promise to keep all information strictly confidential for the project work. Thanks for your assistance. Company name: Respondents position in the company: Number of employee: .

PLEASE FILL THE BLANK SPACES AND TICK WHERE APPLICABLE. 1. When was the company established? ................................................................ 2. What are your mission and main objective?

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. 3. What are the visions of the company? ..

4. Is your company listed on the stock exchange? A. Yes [ ] B. No [ ] 5. When did you get listed on the stock exchange? .... 6. What are your reasons for being listed on the stock exchange? ... 7. Have you realized your objectives for listing on the stock exchange? A. YES [ ] B. NO [ ] C. others (specify).

8. How would you rate your performance currently? 9. A. Have there been mergers and acquisitions with your company? A. YES [ ] B. NO [ ]

B. if yes for the above question, when did it happen and with which company? .. 10. What is the level of your recruitment for the following years?

Year

2007

2008
51

2009

Management Other staffs

11. What is your production level for the following years? Year 2007 2008 2009

12. What is your level of automation in production? A. Automated B. Highly automated C. Just automated

13. What is the level of automation in Accounting? A. Automated B. Highly automated C. Just automated

14. What are some of the practical problems faced in implementing the application of financial records? ..

15. How is the performance of the company measured?


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16. Does the company use ratio analysis to examine the performance? A. YES [ ] B. NO [ ]

17. If yes to the question above which type of ratios do you use in analyzing the financial statement? A. Profitability ratio B. Leverage ratio C. Activity ratio D. Liquidity ratio E. Market ratio

18. When was the last time the company checked it performance? ..

19. How many shareholders does the company have? .

20. Is there any agreement among managers, accountants or financial analyst about what constitutes real economic profit? A. YES [ ] B. NO [ ]

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21. If yes to the above question does it have a good impact on the companys performance?
A. YES [ ] B. NO [ ]

22. What is the companys average debt collection period? A. One week to one month B. From one month to two month C. From two month to six month D. From six month to one year

23. Indicate the companys turnover in days A. 1 day to 10 days B. From 30 days to 60 days C. From 60 to 183 days D. From 183 to 365 days

24. Do you think that the risk return trade-off in managing your company relates to the level of profitability and liquidity? A. Yes [ ] B. No [ ]

25. If yes, then does your cash generating items such as inventory financed according to the amount of time it takes for the return on investment to pay back? A. Yes [ ] B. No [ ]

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