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

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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