African Journal of
Agricultural Research

  • Abbreviation: Afr. J. Agric. Res.
  • Language: English
  • ISSN: 1991-637X
  • DOI: 10.5897/AJAR
  • Start Year: 2006
  • Published Articles: 6863

Article in Press

Financial Performances analysis of Multipurpose Farmers Cooperatives at Enemorna Ener Woreda, Gurage Zone, Southern Ethiopia

Abdelhadi Tashega, D/r Tewodros Tefera

  •  Received: 27 June 2019
  •  Accepted: 25 November 2019
Performance measurement is defined as the process of quantifying efficiency and effectiveness. Effectiveness is compliance with customer requirements, and efficiency is how the organization’s resources are used to achieve customers’ satisfaction levels. Agricultural multipurpose farmer’s cooperatives could play classical roles to increase smallholder productivity and incomes which lead to economic empowerment. The main purpose of this research is to study the financial performance of Multi-Purpose farmer’s cooperative in Gurage zone, Enemorena Ener Woreda. Fourteen farmer’s cooperatives are selected based on continuous auditing of the targeted farmers cooperatives. The study considered three years auditing reports with regard to quantitative data analysis using financial analysis tools, such as liquidity ratios, leverage, and profitability ratio. The ratio analysis results revealed that 85.7% of the primary farmer’s cooperatives had a current ratio less than 2.0. It implies most of the farmer cooperatives could not recharge their short term obligation without disrupting the normal operations of the business. 71.4% of the farmers cooperatives average leverage ratio was 0.665. It implies a farmer’s cooperatives financed more of their asset with creditor’s fund. Therefore, most farmer cooperatives under investigation were severely unable to pay their debt. 57.2% of the cooperatives earned return on their own asset below the interest rate of most financial institution. It indicates, most farmers’ cooperatives had faced a problem with respect to management’s effectiveness and efficiency in terms of using their assets to generating profit and in the marketing process such as product pricing, generating sales and controlling cost of sales. To improve their efficiency in order to gain enough profit, and to save accumulated profit the farmer’s cooperatives must decrease administrative and operating expenses which eventually lead to maximizing profits, especially that the finding of Profitability, Liquidity, Leverage and return on assets are below the average.

Keywords: Multipurpose farmers Cooperative (MFC), financial analysis, ratio analysis, performances