How Does Ratio Analysis Assist in the Financial Management of Tertiary Institutions In Nigeria

Abstract

The objective of this research is to evaluate theextent to which ratio analysis would assist in the  financial management of state owned tertiaryinstitutions in Nigeria using Polytechnics in North Central States of Nigeriaas a reference point. Specifically, the study aims to ascertain therelationship between the application of ratio analysis and effective managementof staff loan schemes, efficacy of internal control processes; management offinancial risks; control of frauds and forgeries and financial effectiveness ofthe management of revenue collection processes. In achieving the objectives ofthe study, cross sectional survey research design involving the distributionsof structured questionnaire was used. This was supported by an ordinary leastsquare model. Data generated from the survey were analyzed using simpleregression model. The significant findings of the study is that effective ratioanalysis in tertiary institutions is sin qua non for proper financialmanagement of staff loans schemes in the institutions, increases the efficacyof internal control processes and aids in the early detection of frauds andforgeries in the tertiary institutions. The implications of the findings isthat if proper financial evaluation techniques are not employed in the higherinstitutions frauds and poor internal control mechanisms would triumph. Toadequately assess the financial managerial performance of any institution,absolute accounting figures have to be expressed in ratio, which will be usedas yardstick for assessment. Based on the findings of this study, it was highlyrecommended that for management to effectively analyze the financial managerialperformance of some key functions of the institutions effective ratio analysiswill be helpful as this reflects quantitative relationships and thus helps toform qualitative judgment about the key performance indicators of theorganizations.Keywords:Ratio analysis, financial management, Nigeria, Tertiary Institutions,North Central .