THE USEFULNESS OF FINANCIAL STATEMENTS IN

ASSESSING THE PERFORMANCE OF A COMPANY

AND IN GUIDING INVESTMENT DECISIONS

THESIS PROPOSAL

Researchers:

Benipayo, Quennie

Caa, Rafael

Gabarda, Christine

Paulo, Jonalyn

Soriano, Chriestal
 CHAPTER I

THE PROBLEM AND ITS BACKGROUND

Introduction

Financial Statements are known to be very important in every business. These financial

statements provide the vital information about the companys financial health which will be useful

in making economic decisions. Financial Statements are the information that help the company

to know what data of the aspect of the company provides best in return in investment. The

information of the statements provide offers benchmarks and feedback that help the company

make minor adjustments and also determine its overall direction.

The statements are distinct to each other but have one goal which is to know the stability

of the entity. These financial statements are the Income Statement, which is to know if the

company is gaining profit or not; Statement of Cash Flows, which is useful in assessing the

ability of the entity to generate the cash and cash equivalents; Statement of Financial Position,

which pertains to the liquidity and solvency of the entity; and Changes in Owners Equity, which

explains the changes of the net income or loss from the investment of the owner or the

shareholders. These statements are done every period by those whose expertise is to do so

who is referred to as the Accountants.

Existing and potential investors, Lenders and other creditors are the primary users of the

Financial Statements for they are the most critical and immediate persons in need of this

information. Financial Statements do not provide all the information that these primary users

need but helps them to estimate the value of the entity. And the information that are given to the

users are those common and not those specific ones.

 Since it is to be known that these pieces of information are important, it is to be known

also how these pieces of information help the users in a way that they are really using it for the

economic decisions. Know how it is done and how does it really help the entity to move forward

or to be more profitable in their own way. In making these statements, there must be

consciousness on how it must be done and merely know how these statements or information

helps the entity to improve their performances inside and outside the firm.

Background of the Study

Financial statements are created internally by the management and will be inspected

investors,creditors and other users. These financial statements must be in line with the PFRS

and PAS, in order for it to be useful in making decisions.

That is usually the case when it comes to dealing with the use of financial statements.

There are different users that require the financial statements in order to make a sound decision.

Those included are the internal user, the direct users, the external users, and the indirect users.

The internal user is the management, whose responsibility is to make sure that the financial

statements are faithfully represented and relevant for the users to make an economic decision.

The direct users are the investors and creditors, who relies on the financial statements in order

to find out if the company is worth investing or lending, respectively. The external users are the

government, who wants to be updated on whether the company is paying the proper tax; the

employees, who wants to be sure that they are given just compensation; and customers, who

wants to be sure that the company that they are advocating will not close down. The indirect

users are the stock exchange, trade association, and financial analysts, whose purpose is to

assess the financial statements that the company creates and advise their clients.

The researchers of this study aim to help the users of the financial statement in

developing a plan to guide the users to a right investment track. They believe that the financial
statement is very useful in determining the companys performance and in guiding the users to

an economic decision.

Conceptual Framework

The study aims to guide standard-setters, preparers and users of financial information in

the preparation and presentation of statement. It also aims to know the general purpose of

Financial Statements, including the statement of financial position, income statement, statement

of comprehensive income, statement of changes in equity and statement of cash flows.

In the absence of a standard or an interpretation that specifically applies to a transaction,

management shall consider the applicability in developing & applying an accounting policy that

results in information that is relevant & faithfully represented. There are many users in financial

information. The primary users are the parties to whom general purpose financial reports are

primarily directed including the existing and potential investors, lenders and other creditors.

While the other users they are parties that may find the general purpose financial reports useful

but the reports are not directed to them primarily, including the employees, customers,

governments and their agencies, and the public. The researchers came up with the study

because they noticed that the importance of financial statements in company. Different company

nowadays have their own accountants in order to know the company's performance it's either

the strategy of company's income is effective or not so that they can change and create new

effective strategies.

In the absence of a standard or an interpretation that specifically applies to a transaction,

management shall consider the applicability in developing & applying an accounting policy that

results in information that is relevant & faithfully represented. There are many users in financial

information. The primary users are the parties to whom general purpose financial reports are

primarily directed including the existing and potential investors, lenders and other creditors.
While the other users they are parties that may find the general purpose financial reports useful

but the reports are not directed to them primarily, including the employees, customers,

governments and their agencies, and the public. The researchers came up with the study

because they noticed that the importance of financial statements in company. Different company

nowadays have their own accountants in order to know the company's performance it's either

the strategy of company's income is effective or not so that they can change and create new

effective strategies.

The researchers pursue this because they wanted to study and to share what is

usefulness of financial statements in the field of company's performance.

Research Paradigm

Input Process Output

Demographic Profile
1. Age
2. Gender
3. Accounting Position
4. Type of Industry Conducting survey Improved Company
Level of Usefulness questionnaires to Performance and
1. Shareholders/Owners respondents Investment
2. Creditors Decisions by
Analysis of Financial
DINOPUT
3. Employees Assessing Financial
Statements
4. Government Statements
5. Consumers Statistical Analysis
6. Researchers
Company Performance Assessment
1. Profitability
2. Liquidity
3. Solvency
4. Stability

Figure 1.

Statement of the Problems

Generally, this study examines the usefulness of financial statements in assessing the

performance of companies and in guiding investment decisions.

 Specifically, it sought to answer the following:

1. What is the demographic profile of the respondents in terms of:

1.1 Gender

1.2 Age

1.3 Accounting Position

1.4 Industry

2. What level of usefulness of financial statement is given by the company in terms of:

2.1. Shareholders or Owners

2.2. Creditors

2.3. Employees

2.4. Government

2.5. Consumers

2.6. Researchers

3. What level of usefulness do financial statements provide in assessing company performance

in terms of:

3.1 Profitability

3.2 Liquidity

3.3 Solvency

3.4 Stability

4. Is there a significant relationship between the assessment of financial statements and

investment decision making?

Hypothesis

There is no significant relationship between the assessment of financial statements and

investment decision making.

Significance of the Study

The purpose of the study is to know the use of financial statements in the company and to

help the following beneficial in making decisions:

The Investors. The study will benefit the investors. The financial statements give various

information that the investors use to evaluate the companys financial performance. Since they

are the owners, they can rely on the financial statements for the both safety and profitability of

their investments. Specifically, they need to know where their money went and where it is now.

They need to determine if the business is profitable and whether to continue, improve or drop it.

The Company Management. The research will benefit the company management. They

need to understand the profitability, liquidity and cash flows of financial statements. They need

to monitor the income and the expenses of the company. So that it can make operational and

financing decision about the business.

The Lenders. The lenders will benefit this study. As the lenders, they need to see the

financial statements of the company. They need to see the cash flows, if that company makes

profit. In that way, they will decide whether their loans will be paid when due, and whether or not

to issue new loans to the entity.

The Suppliers. The suppliers will also benefit the study. Suppliers will require financial

statements in order to decide whether it is safe to extend credit to a company. They need to

know if they will be paid. And for a new supplier, they may also require the reassurance about

the financial health of a business before agreeing to supply goods.

The Employees. And last the employees will benefit this study. The employees need to

know the stability and profitability of their employers. This may give them confidence about their

jobs and could be used to discuss salary and conditions of employment. This can be used to

increase the level of employee involvement in and understanding of the business.

Scope and Limitation

This study will involve the assessment of the financial statements of San Miguel Pure

Foods Company, Inc. during the year 2016. The researchers will conduct a survey to the

employees of this company to determine their demographic profile that indicates age, gender,

accounting position, and type of industry where they are currently employed; the level of

usefulness of financial statements to shareholders or owners, creditors, employees,

government, consumers and researchers; and the level of usefulness in assessing the company

performance in terms of: profitability, liquidity, solvency and stability.

This study would only 30 employees of San Miguel Pure Foods Company, Inc. as

respondents. Other companies will not be included.

Definition of Terms

For better understanding, the following terms are defined:

Conservatism deals with possible errors in measurement be in the direction of

understatement rather than overstatement of net income and net assets. Simply stated, it means

that it is to think of a loss and forget about income.

Faithful Representation is the actual effects of the transactions that are properly accounted. It

must show the correct amounts and actual effects of the transactions.

Forensic Accounting is a field of accounting that integrates accounting, auditing and

investigative skills.

Liquidity is the ability of the company to meet currently maturing obligations

Profitability is the ability of the company to make money

 Relevance is the capacity of the information to influence a decision

Solvency is the availability of cash over the longer term to meet maturing obligations

Understandability is the characteristic of the financial statement that is comprehensible or

intelligible if it is to be most useful

Verifiability is concerned about the different knowledgeable and independent observers who

could reach consensus, although no necessarily complete agreement

 CHAPTER II

REVIEW RELATED LITERATURE

Financial Statements

A financial statement is defined by accounting standard committee (ASC) as a balance

sheet, profit and loss accounts, and statement of source and application of funds, notes and

other statements, which collectively are intended to give a true and fair view of the financial

position and profit or loss. Several companies incorporate fixed assets valuations into their

balance sheets, in which case the depreciation charge in profit and loss is based on revalued

amount. Some companies draw up their financial statements on a current cost basis, but this is

rare compared with the use of historical cost or modified historical cost.

A financial statement is part of a companys annual report, the purpose of which is to

communicate information about the company to those who have the right to receive it for

instance, the shareholders, in addition to investors, potential investors and other users of

financial statements.

It provides an indication of companys trading performance and gives a snapshot of

aspects of its financial position at a particular date. At a minimum, a financial statement consist

is of accounting policy, balance sheet, profit and loss portraying organizations and income and

expenditure for non-trading organizations, notes to the account, directors report, sources and

application of fund and value-added statement. The analysis of financial statement or an

account is therefore the interpretation, amplification and translation of facts and financial

statements, the purpose is to draw relevant conclusions, therefore, making of inferences as to

business operations, financial positions and future prospects.

 The procedure involves.

a. Analysis of data contained in the financial statement into certain basic component

parts. For instance, in carrying out a profit analysis, the net sales is a very important

figure and other data in the account like cost of goods sold, gross profit and cost of

production are compared with this cove of the income statements. Similarly, in

balance sheet analysis, the cove components are net assets which are usually

compared with ones capital, loan stock and working capital.

b. Translation of those data into cheer and simple form. The translation process may

lead to extraction of ratios or percentages that establish relationships between

comparable data or even the presentation of graphs and charts.

c. Drawing relevant conclusions and making inferences concerning the companys

financial position, stability, profitability and solvency.

d. Presentation of information do obtain to management for decision making. The

information is used in the forward process for future controls and policies. The

application of this information will involve the isolation of the factors responsible for the

state of affairs which are revealed by the analysis.

The analysis could be horizontal or vertical internal or external horizontal analysis is a

comparison of data in financial statements of two or more consecutive accounting periods to

detect whether performance has improved or not. Example, the profit of 1994 of a company

could be compared with that of 1995, 1996 with 1997 and after which a trend may arise from the

analysis. This analysis is internal as it concerns financial data of one company alone. A vertical

analysis as external s it concerns financial data of one company and another. That is, external
when a comparative study of data between one companys financial statement and that of

another over a given time.

It is wholly external and involves a comparative analysis of data in financial statements

within a single period.

Use of Financial Statements

Readers of a financial statement are seeking to understand key facts about the

performance and disposition of a business. They make decisions about the business based on

their reading of the statements. Because financial statements are widely relied upon, they must

be straightforward to read and understand.

For large corporations, these statements are often complex and may include an extensive

set of notes to the financial statements and explanation of financial policies and management

discussion and analysis. The notes typically describe each item on the balance sheet, income

statement, and cash flow statement in further detail. Notes to financial statements are

considered an integral part of the financial statements.

Owners and managers frequently use financial statements to make important business

decisions, for example:

Whether or not to continue or discontinue part of the business.

Whether to make or to purchase certain materials.

Whether to acquire or to rent/lease certain equipment in the production of goods.

The documents are also helpful in making long-term decisions and as a source of historical

records.

Other individuals and entities use financial statements too. For example:
 Prospective investors use financial statements to perform financial analysis, which is a

key component in making investment decisions.

A lending institution will examine the financial health of a person or organization and use

the financial statement to decide whether or not to lend funds.

Philanthropies may use financial statements of a non-profit as a component in

determining where to donate funds.

Government entities (tax authorities) need financial statements to ascertain the propriety

and accuracy of taxes and other duties declared and paid by a company.

Vendors who extend credit may use financial statements to assess the creditworthiness

of the business.

Employees also may use reports in making collective bargaining agreements

Financial Planning Analysis

The basis of financial planning analysis and decision making is the financial information.

Financial information is needed to predict, compare and evaluate a firms earning ability. It is

also required to aid in economic decision-making investment and financing decision making. The

financial information of an enterprise is contained in the financial statements. Financial

statements, according to Gavtan (2005), is defined as financial information which is the

information relating to financial position of any firm in a capsule form. Financial statement

according to Ohison (1999) was defined as a written report that summarizes the financial status

of an organization for a stated period of time. It includes an income statement and balance sheet

or statement of the financial position describing the flow of resources, profit and loss and the

distribution or retention of profit. Financial statement according to Academic of organization

Dictionary is a document which sets out the assets, income, expenses and debts of a company

to allow a third person to assess that companys health.

The use of accounting information by shareholder depends on their efficiency on both

making reasonable decision from such statement and also the level of their knowledge over the

broad areas of accounting information. Accounting concepts do not rest on universal truth or

general laws. Therefore, judgment is applied to the interpretation of economic and social events

and the subjective nature of these values implies that measurement process in accounting is not

precise and there is opportunity for controversy as regards to how to measure events. More

also, financial statements do not reflect many factors that affect financial condition because they

cannot be stated in monetary terms. Such factors include the reputation and prestige of the

company with the public, the credit rating of the company, the efficiency, loyalty and integrity of

management. Again, both the balance sheet and the income statement reflect transactions that

involve naira value of many dates. It is evidenced that naira has declined remarkably in

purchasing power, and the challenges here now is how has the published financial statement

taken care of these changes in price level. The published statement is considerably prepared

using historical cost system which represents fictions paper profit. Remarkably, Statement of

Standard Accounting Practice (SSAP) 7 or International Accounting Standard (I.A.S) provides

that financial statement should reflect the impact of changes in price level, yet in the current

published financial statements, the application of this standard (the current cost accounting and

current purchasing power accounting) is still a thing of doubt. In addition to that, the complexity

and technicality of reported information including the highly technical language of accounting

appear to make the qualitative aspect of company and other reports unsuitable source of

knowledge for a typical private investor lacking the experience to make best use of them. This

invariably places a considerable premium on the analyst and the journalist upon whom the

private investors may largely rely in their investment decision making. Equally, according to
Umeaka (2003) there is a problem of harmonization of accounting practices and standards of

different counties of the world into agreement, so that a common set of principles will be used in

preparing financial statement and making disclosure. This harmonization is necessitated by the

fact that managers and investors found it difficult to understand the context in which financial

information from other nations is generated.

As postulated by I. M Pandeg (2005) investment decisions or analysis has to do with an

efficient allocation of capital. It involves decision to commit the firms funds to the long-term

assets. Such decisions are of considerable importance to the firm since they tend to determine

its value size by influencing its growths, profitability and risk. Investment decision of a firm is one

which is expected to produce benefits to the firm over a long period of time and it can pass both

tangible and intangible assets (porter field J. T. S 1995). The investment decisions of a firm are

generally known as the capital budgeting decision may be defined as the firms decision to

invest its current funds most efficiently in the long-term assets in anticipated of an expected flow

of benefits over a series of years. According to Canada and White (4) is the series of decisions

by individual economic units as to how much and where resources will be obtained and

expected for future. Situation where capital expenditure decisions are made or taken, they are

based primary with measurement of capital productivity which provides an objective means of

measuring the economic worth of individual investment proposals in order to have a realistic

basis for choosing among the Firms long run property. (Pandey 2005). The long-term asset is

those which affect the firms operation beyond the year period. The firms investment decision

would generally include expansion acquisition, modernization and replacements of the long-term

assets. Sales of division or business divestment are also analyzed as an investment decision.

Activities such as change in the methods of sales distribution or undertaking an advertisement

campaign or a research and development programs have long-term implications for the firms

expenditures and benefits, and therefore, they may also be evaluated as investment decisions.
 According to Aroh J.C., et-al (2011), the most important purpose of the annual report is to

get the shareholders informed about the financial status of his company, especially as to its

income and financial position. The usefulness of financial statement to investors is to assist

them to assess the ability of an enterprise to pay divided and interest when due while to the

potential investors, published financial statement is used to decide on the type of security to

invest in or which company to invest in. Conclusively, financial statement of accompany should

provide information about the economic resources of a company, which are the sources of

prospective cash inflows to the company. It should also provide its obligation to transfer

economic resources to others which are the source of prospective cash outflow from the

company and its earnings which are the financial results of its operation.

According Adebayo, M. et-al (2013), they examine the impact of accounting information

system in assisting organizations in making sound and effective investment decision. The major

source of data to their research was primary data through the administration of questionnaires.

Regression analysis and Karl Pearsons correlation was used for the data analysis. Their

findings shown that accounting information system is an indispensable tool in investment

decision making in todays turbulent world. Organizations are however, advised to invest on

information technology tools as it improve their efficiency, effectiveness and their overall

performance.

The availability of financial statement of companies and financial capital are prerequisite for the

raped development and transformation of any nations and economy and the development of

accounting information.Since the provision and efficient management of this scarce resources is

best facilitated by the existence and appropriate functioning of financial institution in the

economy, it follows that final accounting of companies are being properly prepared by

accountants who have a vital role to play in the development and up-keep of records in any

organization in the economy.

Forensic Accounting

After major scandals such as West Management, Inc., Xerox, Enron, WorldCom,

Sunbeam Corp., Adelphia, Freddie Mac, Lehman Brothers, AIG, and Bernard Madoff, of what

appear to be financial statement reporting fraud and earnings manipulations and without any

doubt that the image of the accountant has been tarnished and affected many organizations and

people involved. Nevertheless, Forensic accounting has attracted and gained status in the

accounting and legal communities and has gotten a lot of respect and attention after the 9/11

attack; when the FBI hired forensic accountants to shut down the cash flowing transactions into

the terrorists network using financial sleuths, when it was determined that a number of

perpetrators used debit cards that had been set up largely by untraceable cash (Crumbley,

2009).

The stock market capitalization of companies affected by financial statement fraud had

been devastating. A 2006 report by GAO found that in one day surrounding the initial

announcement of a restatement due to financial statement fraud, the companies affected by

frauds had lost almost 100 billion overnight in market capitalization.

Forensic accounting or forensic auditing cover spectrum of activities of work an

accountant could be asked to perform investigation into the financial affairs of a corporation that

is often associated with investigations into the alleged fraudulent activity, and uses intelligence-

gathering technique and accounting skills to quantify the financial monetary loss, if fraud had

actually taken place, identify the sides of those involved, and present the findings to the clients

and capable of providing credible expert witness testimony in the event of a court case

(Kranacher, Riley, Wells, 2011).

Traditional financial statements auditing procedures ensure that the financial statements

are free from material misstatements, as cited in AICPA Statement on Auditing Standard (SAS)
99, however, Auditors are not currently responsible to plan and perform auditing procedures to

detect misstatements that are not judged to be material; whether they are caused by errors or

fraud. SAS 99 includes an additional guidance to the auditor to identify potential risk of

misstatement by assigning persons with specialized skills and knowledge forensic specialists.

(AICPA, Professional Standards, vol. 1, AU sec. 316.50)

Companys accounting system can be exploited and hacked by anyone who has the

intention of defrauding the organization and knows very well how to Cook the Book.

Traditional financial statement audit does not look at every transaction, on the other hand,

forensic examination search and try to determine why everything does not and should not add

up.

Allegations of financial statements fraud involve investigations which are resolved through

court orders and forensic or fraud examiners involves the application of special accounting and

law skills, auditing, finance, quantitative methods, and investigative ability to collect, analyze,

interpret and evaluate evidence to reduce the complexity by extracting information and slicing

away any deceptions (Sheetz 2007).

Forensic accounting could be asked to investigate financial statement fraud, also known

as fraudulent financial reporting and white-collar crime investigation so as to cause a material

misstatement in the financial statements with the intention of presenting the financial statements

with favoritism. These types of financial frauds are perpetrated by upper managements and are

usually the most to benefit from the financial statement fraud, from stock options, to job

performance bonuses and promotions. According to the ACFs 2010 Report to the Nations on

Occupational Fraud and Abuse, Fraudulent financial reporting comprised of 4.8 percent of the

total fraud with the median loss of 4.1 million per shares (Sheetz 2007).
Synthesis

The researchers gathered sample, related and relevant data that helped in a better

understanding of their research. The information gathered in the related literature provided a

simpler explanation on what the researchers are planning.

The usefulness of financial statements in assessing the performance of a company and in

guiding investing decisions concerns about the financial statements and how it can be useful for

the investors in making decisions regarding the wealth of the company. It entails the proper

auditing of a financial statement and the risk of fraud in a company. In order for a company to

properly plan the investing activity that occurs during their operation, they must properly assess

their financial statements and make sure that they have a proper fund or saving for investing

activity.

Though there are different formats in reporting financial statements, as long as these

financial statements have been complied with the PFRS and PAS, these financial statements

have faithfully represented the activities of a company and can be used in assessing the

performance of a company. And in critiquing these financial statements, the auditor, or the one

who will assess whether these statements provide evidence to the activity of the company, must

have thorough knowledge in order to avoid fraudulent acts. Once thoroughly analyzed, these

financial statements may then be used in guiding investors to make economic decisions that will

benefit the company in the future.

If the financial statements are useful in assessing the performance of a company, the

financial statements are thus useful in guiding economic decisions.

 CHAPTER III

RESEARCH METHODOLOGY

This chapter shows descriptive method of research to gather the necessary information

needed in the study.

Demographic description of the respondents, research instruments and data gathering

will be discussedin this chapter.

Research Method Used

The researchers will use a descriptive method. including their demographic profile.This

method will indicate the description of the gathered data.

Descriptive research method is best in collecting data.It is easier to understand because it

describes the situation more completely than what was possible without applying this method.

According to Bickman and Rog (1998), descriptive research method is used to describe specific

terms.

Descriptive research method will be used in this research to describe the characteristics

of the phenomenon being studied. This method may answer the questions, who, what, where,

when, and how. The method will be used in this research because the data will be collected

through a survey questionnaire.

Population Frame and Sampling Scheme

The survey will be conducted at San Miguel Pure Foods Company, Incorporated in 40

San Miguel Avenue, Ortigas Center, Mandaluyong City. However, due to the limited resources

and time constraint, the researchers will only be able to conduct surveys to available participants

provided by the management. Thirty (30) respondents will be chosen by the management to

participate.
 Convenient sampling method will be used in this research. It is a type of non-probability

sampling method that depends on the data collected from the respondents who are available to

participate in the said study. In other words, this method involves getting participants wherever is

convenient.

The researchers used convenience sampling not just because it is easy to use, but

because it also has other research advantages. This sampling technique is useful in

documenting a particular quality of a substance within a given sample. It is also one of the only

methods you can use when you can't get a list of all the members of the population. Such

methods are very useful for detecting the relationship among different phenomena.

In convenient sampling, the researchers will aim to describe how samples will differ from

an ideal sample that will be randomly selected. It is also necessary to discuss the individuals

who might be left out during the selection process or the individuals who are overrepresented in

the sample.

Description of the Respondents

The respondents of this study are the employees of San Miguel Pure Foods Company.

These respondents will be characterized using certain demographic variables as pertaining to

gender, age, industry, and accounting position.

The respondent will also include the investors of the company to help the study progress.

Instrument Used

A survey questionnaire is going to be provided for data gathering in line with this study.

This type of questionnaire, in paper form, that a respondent complete in the survey. The

researchers let the respondents choose from a set of guided-response questions.

 The questionnaire will consist of three sections. The first section is the demographic

profile of the respondents. It aims to describe the respondents in terms of gender, age industry,

and accounting position. While the second one is research-made survey questionnaire

pertaining to the level of usefulness that the financial statements provide. It is divided into six

subparts: the shareholders/owners, creditors, employees, government, consumers, and

researchers.

The last section will determine the level of usefulness that financial statements provide in

the assessment of company performance in terms of: profitability, liquidity, solvency and

stability.

Data Gathering Procedure

The researchers will make a request letter addressed to the management of San Miguel

Pure Foods Company, Inc. It will be used for the approval to conduct a survey in the company.

Statistical Treatment of Data

1. The demographic profile of the respondents will be analyze through encoded data

and will be structure into a frequency and percentage distribution. To describe the

distribution of the respondents in terms of, gender, age and occupation,

percentage will be use.

%=
Formula:

Where: % = Percentage distribution

f = Frequency distribution
 n = Number of distribution

2. From the assessment of the respondents, the average weighted mean will be

compute to measure the productivity of the entity. This will be computed based on

the following formula.

()
Formula: X=

Where: X = Average weighted mean

WM = Weighted mean

N = Number of Items

3. Pearson r- is a measure of correlation between two variables X and Y. Pearson r-

is being used to test whether there is a significant relationship between the

effectiveness of Entity - Investor Relationship.

Formula:

Where: r = Pearson correlation coefficient

X = Values in first set of data

Y = Values of seconds set of data

N = Total number of value