1 CHAPTER ONE
1.1 INTRODUCTION
1.1.1 BACKGROUND OF THE RESEARCH
Financial information analysis refers to the process and technique used to identify and extract the critical information contained in the financial statements and any supporting documentation (O’Regan, 2006). Information contained in these statements is critical for analysis and interpretation of the financial performance of a given entity. However, the financial statements are not sufficient for decision-making as they are and further analysis is needed before they can be relied on. Financial analysis enhances this by identifying trends through ratio analysis, which then allow the user to draw meaningful conclusions.
Financial information is important especially to the shareholders of an entity. They expect a return on their investments measured by the profitability of the company and could take the form of dividends, bonus issues, rights issues and exercising options and warrants.
Banks are the barometers as it were of the financial health of most economies in the world. They act as financial intermediaries between lenders of funds and borrowers providing credit facilities, safety deposits and consultancy services to all those involved. It is from this basis that this report is developed using Equity Bank Limited, one of the fastest growing commercial banks in Kenya.
The Kenyan banking industry has grown tremendously in the recent past improving access to financial services that was seen by many as a major problem in their attempts to do business. Though it is true that credit in formal banking institutions has grown steadily over the years, the same was not available to the people in the rural areas. This therefore gave Equit ...