Sign In
Register
eISSN:2278-5299

International Journal of Latest Research in Science and Technology

DOI:10.29111/ijlrst   ISRA Impact Factor:3.35,  Peer-reviewed, Open-access Journal

A News Letter Sign UP!
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

Correspondence should be addressed to :

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

Share
Download 126
View 185
Article No. 10498
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

Copyright
References
  1. Agrawal et al, (2002). Member- Funds and cooperative performance. India: Finance and accounyind area of Indian institute of management.
  2. Andrew, J. and Gallagher, J. (1997). Financial Management: Principles and practices. Prentice-hall, inc
  3. Central Statistical Agency. (2008). Statistical Report of the 2007 population and housing census,Population census Commision, UNFPA, Addis Ababa.
  4. Chambo, S. (2009). Agricultural cooperatives: Role in food security and Rural Development. Paper presented to Expert Group Meeting on cooperatives, New York.
  5. Chesnick David S. (2000). Financial Management and Ratio Analysis for Cooperative Enterprises. United States: Rural business cooperative service.
  6. Daniel G, short fundamentals of financial Accounting, Seventh edition, Irwin,1993
  7. Destahun Haile. (2007). Cooperative Approach to local Development: The case of coffee cooperative unions in coffee growing regions of Ethiopia, M.A Thesis, Addis Ababa University.
  8. Dooren, P.J. (1986). Cooperatives for developing countries: Objectives, Policies and practices of cooperatives, The Plunkket Foundation.
  9. Federal Cooperative Agency (2009). Status of cooperatives in Ethiopia: (Unpublished) AddisAbaba.
  10. James M. Reeve, Car. S Warren, Jonathan E. Duchac, (2009).Principles of financial accounting, South-Western Cengage Learning in China P.710-714
  11. James M. Wahlen, Stephen P. Baginski, Mark T. Bradshaw,(2011). Financial reporting, Financial statement analysis, and valuation Strategic prospective
  12. Krishna Reddy B, (1992), Financial Management, Rupa Books Pvt. Ltd,,Tilak Nagar,Jaipur-04.
  13. Krishnaswamy O.R and Klandaiswamy. (2000). Cooperation, concepts and theory: Aruda Academy, Thamilnadu.
  14. Liberand, B. (2007). Measuring the performance of agricultural cooperatives: Rural Business and cooperative programs, USDA, Washington, D.C.
  15. E. Thukaram Rao (2003), Management Accounting, New Age International Publishers, Srishay sai institute of Higher Learning  Bangalore .p42-224
  16. Mekonnen Kassa. et al. (2007). Development of saving and credit cooperatives in Ethiopia: Occasional paper No.19, Addis Ababa.
  17. Metcalf, R. W. and P. L. Titard, Principles of Accounting, W. B. Saunders, (Philadelphia) 1976, P-157
  18. MoARD, 2009. New Agricultural Extension Service Process Description and Working Procedure, Addis Ababa.
  19. S, (2002), A Treatise on Cooperative Management, Rainbow Publications, Coimbatore, Pp.385.
  20. Pandey I.M, (2006), Financial Management, Vikas Publishing House Pvt. Ltd., 576, Masjid Road, Jangpura, New Delh-14.
  21. Parnell, E. (1999). Reinventing cooperation: The challenges of the 21st century, The Plunkket Foundation.
  22. Ramachandran R & Srinivasan R, (2010), Financial Management, Sriram publications, 1-G kalyanapurm, Tennur, Trichy-17.
  23. Risk Antle and Atanlay J. Garstka,(2004). Financial Accounting,South-Weastern,5191 Natrop,in Canada p.22-78
  24. S.K&Sahoo S.C, (1991) Management of Cooperative Banks in India, J.L. Kumar for Anmol Publications, 4378/48, Ansari Road, Daryaganj, New Delhi-02.
  25. Sarita Sharma, (2002), Financial Management, ABD Publishers, B-46, Natraj Nagar, Jaipur-15.
  26. Seetharamu K, (2006), Credit Management in Urban Cooperative Banks, Shanthi Publications, 180,12th ‘B’ Main Road, 6th Block, Rajajinagar, Bangalore-10.
  27. Sindney J.Gray, Belverd.E. Needles, (1999). Financial Accounting, A Global Approach, Houghton Mifflin co.222 Barkeley Street, Boston, MA02116-3764 in U.S.A.
  28. Spiceland, Sepe, Tomassini (2004).Intermediate Accounting,3rd edition, published by McGraw-Hill/Irwin,a business unit of the Mc Graw-Hill Companies,Inc..,1221 Avenue of Americas, New York, Nny, 10020 p.85,-174
  29. Susan V. Crosson $ Belverd E. Needles (2008) Managerial Accounting, Houghton Mifflin company, Boston New york,P.65
  30. Tsegay Berhane (2008). A case study on the financial performance analysis of selected primary cooperatives in Enderta woreda, Tigray Regional state Ethiopia.
  31. Tekalign Dessalagn (2011).A case study of financial viability assessment of Chafe Buluk Multi-Purpose Agricultural Farmers Union in Horo district, Horo Guduru Wellega Zone, Oromia Regional State, Shambu, Ethiopia (unpublished thesis submitted for Main Cooperative Accounting).
  32. Varma M.M &Agarwal R.K, (1999) Financial Management, King Books, Educational Publishers, 1684, NaiSarak, Delhi-6.
  33. Walter B. Meigs and Robert E. Meigs, (1986). Study Guide for use with Financial Accounting, South-Weastern Thomoson in Landan
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

Responsive image

MNK Publication was founded in 2012 to upholder revolutionary ideas that would advance the research and practice of business and management. Today, we comply with to advance fresh thinking in latest scientific fields where we think we can make a real difference and growth now also including medical and social care, education,management and engineering.

Responsive image

We offers several opportunities for partnership and tie-up with individual, corporate and organizational level. We are working on the open access platform. Editors, authors, readers, librarians and conference organizer can work together. We are giving open opportunities to all. Our team is always willing to work and collaborate to promote open access publication.

Responsive image

Our Journals provide one of the strongest International open access platform for research communities. Our conference proceeding services provide conference organizers a privileged platform for publishing extended conference papers as journal publications. It is deliberated to disseminate scientific research and to establish long term International collaborations and partnerships with academic communities and conference organizers.