EXAMINING THE FINANCIAL PERFORMANCE OF PRIMARY AGRICULTURAL COOPERATIVES IN DINSHO DISTRICT OF BALE ZONE OF ETHIOPIA

Year 2019, Volume: 3 Issue: 1, 171 - 176, 18.06.2019

Ahmed Kasim Dube , Burhan Ozkan

Abstract

The dominant agricultural system in Ethiopia is the smallholder
production under rain-fed conditions. However, in many of the
cases the smallholder farmers are disadvantaged in developing countries in
general and in Ethiopia in Particular. Agricultural
sector and economic development of these countries as a whole could be realized
thus by reducing the challenges that the smallholder farmers are facing and
utilizing their potential. In this regards, agricultural cooperatives are
developed to overcome many of these constraints through rendering many agricultural services. Sustaining the contributions of cooperatives to
members and the larger community thus becomes vital that deserves policymakers’
attention. Examining financial performance of the agricultural
cooperatives is very important for better understanding of the policy. Consequently,
the main purpose of this paper was to
examine the financial performance of Multi-Purpose cooperative in Dinsho
district of Bale Zone of Oromia Region, Ethiopia. Using secondary data, financial
analysis tools such as liquidity ratios, leverage and profitability ratio of nine
cooperatives were examined for the period of 2015/16 and 2016/17. The result of
financial performance analysis showed that the financial position of the cooperatives
has not maintained satisfactory level of financial assessment. The Liquidity
ratio of the cooperative was not sound enough under the study period. The debt to asset ratio as a
measure of the financial risk of the cooperatives also showed that the
cooperatives have shortage of their own capital. Furthermore, the
profitability ratio of the cooperatives under investigation in the districts
showed that the profitability of the cooperatives was weak. Therefore, different recommendation deemed to
improve the financial performance of the cooperatives in the study area were
recommended in this study.

Keywords

Cooperatives, liquidity ratio, financial leverage management ration and profitability ratio

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