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International Journal of Latest Research in Science and Technology

DOI:10.29111/ijlrst   ISRA Impact Factor:3.35

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EVALUATION OF THE EFFECTIVENESS OF FINANCIAL PERFORMANCE OF COOPERATIVES: CASE STUDY OF LUME ADAMA FARMERS COOPERATIVE UNION, EAST SHOA ZONE, OROMIA REGIONAL STATE, ETHIOPIA

Research Paper Open Access

International Journal of Latest Research in Science and Technology Vol.4 Issue 2, pp 90-96,Year 2015

EVALUATION OF THE EFFECTIVENESS OF FINANCIAL PERFORMANCE OF COOPERATIVES: CASE STUDY OF LUME ADAMA FARMERS COOPERATIVE UNION, EAST SHOA ZONE, OROMIA REGIONAL STATE, ETHIOPIA

Dr. V.Natarajan, Dr.O.chandra sekhara reddy , Mrs. Hiwot Bekele

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Received : 08 April 2015; Accepted : 11 April 2015 ; Published : 30 April 2015

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Abstract

Analyzing cooperatives union financial statement is significant for members, Board of directors, Government, Non-governmental organization and Researchers to understand the strength and weakness in their operational system. This study is concerned with evaluation of the effectiveness of financial performance of cooperatives: case study of Lume Adama farmers Cooperative Union in Oromia Regional State at East shoa Zone, Lume district. For this purpose, the data requirements for the study were collected from secondary sources, like financial statements mainly (Balance Sheet and income statements) and audit reports of the union. The union was selected purposely, because of the first cooperative union in the country based on the availability of financial statements. The study was considered five years audited report bye- law with regard quantitative data analysis by using the financial analysis tools, such as Common size balance sheet, Income statement analysis, Trend percentage, Fund flow analysis, Cash flow analysis and Ratio analysis over a period of 2009 to 2013 years. The findings from the study revealed that trend of membership of the Union was increasing during the study period but the result of evaluation of the effectiveness of financial performance illustrated. The financial position of the union has not maintained satisfactory level of financial performance; Since the Liquidity ratio of the union was unsatisfactory under the study period, to meet its immediate obligation or short-term solvency. The debt to equity ratio of the union is high which shows inadequate borrowing power of the union and proprietary ratio of the union was very low this indicates outside creditors financed the union. Therefore this low proprietary ratio of the union will include risk to the creditors during the study period. The profitability of the union was lower than the average, with this value it is difficult to fulfill the concerns needed and it could not covered its fixed charges. Asset utilization of the union is not satisfactory and the union has to sale additional share capital and unproductive fixed asset to increase own fund, to improve their efficiency in order to gain enough profit, to save accumulated profit and the union must decrease administrative expense to maximize profit. The union has been a part of financial health (health performance zone). The union needs to visualize their operations, policies and strategies for effective utilization of available financial and human resources. The union should improve their vision and act accordingly for sustenance in fierce competitive financial environment.

Key Words   
Effectiveness of Financial performance, Funds flow analysis, Cash flow analysis, Ratio analysis and

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To cite this article

Dr. V.Natarajan, Dr.O.chandra sekhara reddy , Mrs. Hiwot Bekele , " Evaluation Of The Effectiveness Of Financial Performance Of Cooperatives: Case Study Of Lume Adama Farmers Cooperative Union, East Shoa Zone, Oromia Regional State, Ethiopia ", International Journal of Latest Research in Science and Technology . Vol. 4, Issue 2, pp 90-96 , 2015

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