Effect of Financial Management Practices on Primary Agricultural Multipurpose Cooperatives in Begi District West Wollega Zone, Oromia Regional State, Ethiopia

Abstract

The main objective of this study was to examine the effects of financial management practices on the financial performance of multipurpose cooperatives: a case of Begi district primary multipurpose cooperatives, west Wollega zone, and Oromia regional state of Ethiopia. To achieve the objective of the study, the researcher examined the relationship between financial management practices and the financial performance of selected multipurpose cooperatives. This study adopted a mixed research approach. Data may be collected from the annual financial reports of five (5) selected multipurpose cooperatives listed by the Begi district primary agricultural multipurpose cooperatives from 2016 to 2020. The cumulative result showed that financial management practices had a significant relationship with return on assets as confirmed (F = 16.11; P < 0.05). All the financial management practices were established to have a positive effect on the PAMCs' performance. However, the financial management practices were found to have moderate extents of adoption, which indicates they were yet to be fully utilized in achieving improved performance. The findings also revealed that PAMCs' size had a positive but moderate influence on the PAMCs' they found out that the financial management practices had a significant positive effect on the performance of the PAMCs. The study therefore leads to the conclusion that available financial management practices have a positive and significant effect on the current performance of the PAMCs in the study area. Therefore, effective implementation and utilization of the financial management practices in the PAMCs will translate to better and improved performance in the cooperatives. The study recommends that managers/owners of the PAMCs make the utilization of financial management practices a key priority. The study also suggests that managers/owners of PAMCs take into account the size of their organizations when making managerial decisions. The study recommends that the government and other regulatory bodies create favorable policies on the implementation of financial management practices in the PAMCs.