FINANCIAL STATEMENT ANALYSIS AS A TOOL FOR BUSINESS VALUATION: A STUDY OF ZENITH BANK PLC

Abstract This study investigates the role of financial statement analysis as a tool for business valuation, focusing specifically on Zenith Bank PLC. The objective is to examine the relationship between key financial ratios derived from the bank's financial statements and its market valuation. A mixed-method approach was employed, utilizing quantitative data from a structured questionnaire distributed to stakeholders, including financial analysts, accountants, and investors, alongside secondary data obtained from the bank's annual reports. The findings reveal significant positive correlations between key financial ratios particularly Earnings per Share (EPS) and Return on Equity (ROE) and the market valuation of Zenith Bank PLC. Moreover, the study highlights that stakeholders engage in regular financial statement analysis, emphasizing its importance in informed decision-making regarding investments and valuations. However, challenges such as data accuracy and market volatility were identified as barriers to effective analysis. The research concludes that financial statement analysis is a critical component of business valuation, providing stakeholders with insights into the financial health and performance of Zenith Bank PLC. It recommends enhancing financial reporting standards, investing in training for analysts, and implementing advanced analytical tools to improve the quality of financial analyses. These efforts will not only strengthen the bank's valuation practices but also bolster stakeholder confidence in its financial performance. This study contributes to the understanding of how financial statement analysis can inform business valuation decisions in the banking sector.