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Financial Accounting Ratios as a Tools for Evaluation of Organizational Performance in Nigerian Deposit Money Banks

Authors:
Muhammad Usaini

Addresses:
Department of Accounting and Finance, Federal University Gusau, Gusau, Zamfara, Nigeria.

Abstract:

This study investigates the role of financial accounting ratios in evaluating the organisational performance of listed deposit money banks in Nigeria. Given the complexity and significance of financial performance analysis in the banking sector, this research focuses on determining how well key financial ratios serve as diagnostic and predictive tools. Using panel data covering 10 listed Nigerian banks over a 10-year period (2014-2023), the study employs descriptive statistics, correlation analysis, and multiple regression analysis to evaluate the relationship between financial ratios and performance indicators. The selected financial ratios include Return on Assets (ROA), Return on Equity (ROE), Earnings Per Share (EPS), Debt-to-Equity Ratio (DER), Net Interest Margin (NIM), Loan-to-Deposit Ratio (LDR), and Cost-to-Income Ratio (CIR). Results show that profitability and efficiency ratios, especially ROA, ROE, and CIR, have the most significant influence on organisational performance. Meanwhile, leverage and liquidity ratios such as DER and LDR present mixed and less statistically significant results. The findings contribute to the literature by affirming the relevance of traditional ratio analysis in modern financial decision-making. The study recommends that managers adopt ratio-driven performance assessment in strategic planning, and that policymakers emphasise financial transparency through regulatory frameworks that mandate comprehensive ratio disclosures.  

Keywords: Financial Accounting Ratios; Organisational Performance; Efficiency Ratios; Financial Performance Analysis; Liquidity Ratios; Net Interest Margin (NIM); Loan-To-Deposit Ratio (LDR).

Received on: 16/12/2024, Revised on: 12/03/2025, Accepted on: 15/05/2025, Published on: 09/09/2025

DOI: 10.69888/FTSTPL.2025.000448

FMDB Transactions on Sustainable Technoprise Letters, 2025 Vol. 3 No. 3, Pages: 160-169

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