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Thematic Analysis of Income Statement

88 Citations2009
Rosemary O. Obasi, Mercelina Chizoba Ekweme
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Abstract

This study focuses on finding out the reasons why some companies which report profit may lack cash for distribution. Ten (10) companies listed on the Nigerian Stock Exchange (NSE) formed the subject of the study using their financial statements. Specifically the profit and loss account (P&L) was used as the unit of analysis. Document/content analysis was adopted. Each item in the P&L account was thematically studied to find out what is responsible for cashless profit reported by companies. Credit transactions (credit sales and credit purchases) were found to explain the reason for cashless profit. This finding also lead to a proposed Two Column Profit and Loss Account (TCPLA) that will be more transparent and reliable to users.