Abstract:
This study attempts to look at the usage of financial ratios to assess the performance of Asante Akyem Rural Bank Limited.
The objectives of this study are therefore to help investors and other stakeholders to make sound investment decisions by continuing investing in the Bank.
The method employed involved the conducting of interviews with management and some key employees. The financial statements were used to compute the categories of ratios, analyzed and presented.
Among the key findings the study revealed it includes the following;
1 Inconsistency in the performance of the bank under the profitability ratios, especially for the return on capital employed.
2. It also showed that the bank had a poor debtor collection period under the activity ratios.
3. The study brought to light that the bank was not liquid when compared the current ratio performance to the standard current ratio.
4. From the calculation of interest cover ratio, the study showed that the Asante Akyem Rural Bank Limited was highly burden by debt expenses.
5. From the calculation of returns on equity ratio under the investor/ shareholder ratios showed that, for every cedi invested by the shareholders or the investors there is profit yielded on it.
6. The last but not the least from the interviews conducted, it brought to light that employees of the bank lack information pertaining to the operation of the bank.
Description:
Although performance measurement systems can play a key role in communicating, evaluating, and rewarding the achievement of strategic objectives, ………One of the primary criticisms of performance measurement systems is that they are generally limited to financial indicators, thereby focusing the organization on past performance and encouraging a short-term view of strategic objectives (e.g., Eccles, 1991; American Institute of Certified Public Accountants, 1994; Deloitte & Touche, 1994).
Investors and others stakeholders who have tremendous interest in every business, evaluate the business success and make quality investment decisions based on the financial performance of such entities. Investors will have some level of assurance in the soundness of the management of their investments which will the bases for further capital investments and can focus most of their efforts on how to improve their capital management in a different economic environment.
