A STUDY ON FINANCIAL PERFORMANCE OF MULTIPURPOSE COOPERATIVE UNIONS OF TIGRAI REGION, ETHIOPIA (Published)
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 continuous auditing 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 ofProfitability, Liquidity, Leverage and return on assetsare below the average
Financial position of any company can be easily evaluated through its profitability, liquidity, solvency and activity ratios. Ratio analysis is one of the most easiest and competent tool to evaluate the financial soundness of a company. In this paper the financial health of MMTC has been evaluated by using ratio analysis and the chances of bankruptcy in the near future is evaluated with the help of Z score developed by Prof. Edward I. Altman (1968). From the study of five years (2007-08 to 2011-12), it is deduced from the analysis that profit earning capacity and short term investing capacity of MMTC is quite good, but its financing position of assets is comparatively poor. However the Z score value indicates that it is in a strong position, and it has no chances of being bankrupt in the next two years.