Performance measurement is defined as the process of quantifying efficiency and effectiveness. Effectiveness is compliance with customer requirements, and efficiency is how the organisation’s resources are used to achieve customers’ satisfaction levels. Financial performance deals with measuring the results of the firm’s policies and operations in monetary terms. These results are reflected in the firm’s return on investment, return on assets, value added, etc. The main purpose of this research is to study the financial performance of Multi-Purpose cooperative unions in Tigray Region. Eight unions are selected based on continuousauditing of the targeted unions’. The study considered three years’ auditing report with regard to quantitative data analysis using financial analysis tools, such as liquidity ratios ,leverage, profitability ratio Trend analysis of balance sheet and income statement, and Ratio analysis for the period of 2000 to 2003(E.C). The result of financial performance analysis illustrated that the financial position of the unions has not maintained satisfactory level of financial assessment; since the Liquidity ratio of the union is not sound enough under the study period. The study results indicated that the borrowing power of the unions and the profitability of the unions are lower than the average. The Asset utilization of the unions is not satisfactory and the unions have to sale additional share capital and unproductive fixed asset to increase own fund. To improve their efficiency in order to gain enough profit, and to save accumulated profit the unions must decrease administrative and operating expense which eventually lead to maximizing profits. Especially the finding of Profitability, Liquidity, Leverage and return on assets are below the average.

Keywords: Financial Analysis, Performance, Ratio Analysis and cooperative unions

Article Review Status: Published

Pages: 15-26 (Download PDF)

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