Abstract:
Financial performance is a measure of how well a company can generate revenue by utilizing
assets from its primary mode of operation. But, there was no investigation in the study area.
The purpose of this study was to assess the determinants of Financial Performance of
SACCOS: the case of Toke Kutaye Woreda, West Shoa Zone, Oromia Regional State,
Ethiopia. The secondary data sources were analysed by descriptive statistics, correlation
analysis and, the result of regression analysis. Accordingly Return on asset, operational
efficiency, debt equity ratio, donation, and deposit mobilization are statistically significant
predictor variables in determining the financial self-sufficiency of SACCOs (ROA) Multi collinearity is a statistical concept where several independent variables in a model are
correlated. Collinearity refers to two or more independent variables acting in concert to
explain the variation in a dependent variable. the Asset Quality, Asset turnover ratio and
,turnover ratio have a positively and statistically significant effect on the financial
performance (ROE). Therefore, the findings of the Debt-to-Capital Ratio have a negative and
statistically significant effect on the financial performance (ROE) at p< .001with a B value of
-35.22.However, the result of the Capital-to-Asset Ratio concerning Total Capital/Assets is a
positively and statistically significant effect on the financial performance at p< .001with a B
value of 439.285.Subsequently, the financial leverage and Debt to total assets have a positive
and statistically significant effect on the financial performance (ROE) at p< .001with a B
value of 1.049 and .008 respectively. However, the Debt - Equity Ratio has a negative and
statistically significant effect on the financial performance at p< .001with a B value of -.007.
Before investigating profounder into panel data econometric measurement, the first issue is to
test the assumption of the classical linear regression model (CLRM). These were required to
demonstrate the estimation technique. In this study, the following CLRM assumptions must
be tested: errors term equal zero, multicollinearity test, heteroskedasticity test and normality.
the determinants of the financial performance of SACCOs are implications that the
cooperatives need to focus on these factors for either improvement or profitability. Hence,
the cooperatives have to increase their members’ awareness by either training or any other
way
