CONTRIBUTION OF FINANCIAL STATEMENTS ANALYSIS TO DECISION MAKING OF COMMERCIAL BANKS IN RWANDA CASE STUDY: BANK OF KIGALI PLC PERIOD: 2021-2023

Abstract

This study investigates the contribution of financial statement analysis to decision-making within commercial banks in Rwanda, with a focus on Bank of Kigali PLC. The research aims to analyze the effectiveness of financial statement analysis and its impact on the bank’s decision-making processes. Utilizing horizontal, vertical, and ratio analyses, the study evaluates the financial performance of Bank of Kigali PLC from 2021 to 2023. Key findings reveal a significant increase in net profit, from 51,894,970 Rwf in 2021 to 74,817,679 Rwf in 2023, demonstrating robust financial growth. The net profit margin improved from 28.80% to 33.35%, the return on equity (ROE) increased from 18.16% to 20.42%, and the return on assets (ROA) rose from 3.26% to 3.53% over the same period, indicating enhanced profitability and efficient asset utilization. Additionally, the debt-to-equity ratio remained stable, fluctuating between 4.57 and 4.79, and the current ratio improved from 1.23 to 1.26, reflecting effective management of liabilities and liquidity. These positive trends underscore the importance of financial statement analysis in informing strategic decisions, managing costs, and leveraging assets efficiently. The study recommends enhancing financial reporting, focusing on cost management, leveraging technology, strengthening risk management, diversifying revenue streams, investing in employee training, and enhancing customer-centric strategies. By implementing these recommendations, Bank of Kigali PLC can sustain its financial performance and maintain a competitive edge in the market. The study supports the hypothesis that effective financial statement analysis significantly contributes to informed decision-making and improved financial performance in commercial ban