Performance measurement is defined as the process of quantifying efficiency and effectiveness. Effectiveness is compliance with customer requirements, and efficiency is how the organizationâ€™s resources are used to achieve customersâ€™ satisfaction levels. Agricultural multipurpose farmerâ€™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 farmerâ€™s cooperative in Gurage zone, Enemorena Ener Woreda. Fourteen farmerâ€™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 farmerâ€™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 farmerâ€™s cooperatives financed more of their asset with creditorâ€™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 farmersâ€™ cooperatives had faced a problem with respect to managementâ€™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 farmerâ€™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