Paper Title
The Contribution of Financial Ratios Analysis on Effective Decision Making in Commercial Banks

Abstract
Financial ratio analysis is important to the management, owners, customers, suppliers, competitors, regulatory agencies, tax payers and lenders each having their views in applying financial statement analysis in their evaluations and making judgments about the financial health of organization, while some authors found that financial ratios analysis is not an adequate method by which to evaluate the overall performance of an organization; also the balanced scorecard is more efficient than financial ratios analysis. The general objective of this study was to analyze the contribution of financial ratio analysis on decision making in commercial banks in Rwanda. Specific objectives were to analyze the contribution of liquidity ratio analysis in effective decision making in BK; to determine the effect of efficiency ratio analysis on the effective decision making in BK; to measure the extent to which asset quality ratio analysis affects decision making in BK and to assess the role of profitability ratio analysis on the effective decision making in BK. The findings should enable management of banking institutions come out with realistic policies for ratio analysis aimed at improving the quality of their decision. This research was descriptive and correlational design and used both qualitative and quantitative methods. The population under study was comprised of 139 employees of BK and then, the sample size of the study was 104 employees. This study employed the stratified random sampling technique. This research used regression analysis to establish relationship between variables under study. The Statistical Package for Social Sciences (SPSS) version 16 was used in this study. The data was presented in forms of frequency and percentages. The study revealed that if efficiency ratio increased by one per cent, the effective decision making also increased by 0.910. Hence, there is a positive effect of efficiency ratio analysis on effective decision making and if asset quality ratios analysis increased by one per cent, the effective decision making also increased by 16.935. Hence, there is a positive effect of asset quality ratios analysis on effective decision making. The study concluded that ratios analysis is a good way to evaluate the financial results of bank in order to measure its performance. Ratios allow the bank to compare its business against different standards using the figures on its financial statements. This research recommends National Bank of Rwanda to speed up the sensitization campaign of the Rwandan commercial Banks to focus on ratios analysis as among the best tool to the effective decision making in commercial bank.