“Contribution of Financial Statement Analysis to Decision Making Institutions. Case Study: Bank of Kigali Plc (2020 – 2023)”

Abstract

The purpose of the study was to investigate the contribution of financial statement analysis to decision making institutions in Rwanda based on the achievements made between bank of Kigali plc from 2020- 2023. The specific objectives of the study were to analyze the effectiveness of financial statement analysis institutions by bank of Kigali plc The Field data were collected using documental and observation . The results shows that the of bank of Kigali plc. Regarding to the effectiveness of decision However, the difference here is that, while current and non-current liabilities grow, equity does not grow as fast like liabilities. The horizontal analysis of the Profit and Loss Statement displayed how Bank of Kigali PLC revenues fared against its costs. The alarming thing about this analysis is that revenues grow at almost the same rate with costs which meant that the bank was not using its assets efficiently to boost revenues or the company was not able to cut costs. The next method used was the Vertical Analysis which sought to describe the composition of elements in the Balance Sheet and Profit and Loss Statements. Assets were split into fixed and current assets and then current assets were subdivided current and fixed assets. For the composition of total assets, it is realized that fixed assets are larger and dominate the structure. Profitability ratios were looked at next. These are measures of efficiency with regards to the bank’s ability to internally generate profit from its assets or equity. Net profit margin ware 37.60%; 35.98%; 31.23% and 33.35% respectively. The ratios of return on Assets are 2.95%; 2.95%; 3.22% and 3.53%respectively. And the ratios of Return on Equity are as following: 14.86%; 18.16%; 18.72% and 20.42% respectively. It is from this researcher verified and confirmed the first hypothesis stipulating that “Bank of Kigali PLC apply financial statement analysis effectively”. Also the contribution of financial statement analysis to the decision making in Bank of Kigali PLC were assessed and results demonstrate that, financial statement analysis contribute on investment decision in Bank of Kigali PLC where ROI ratio is 8.65%; 8.57%; 7.43% and 7.80% respectively. And of cause this investment return would not come accidently, but due to the right decisions taken after consulting information provided by financial statement.