Financial Statement Analysis Ofagricultural Cooperatives: The Case Of Embabo Tasfa Farmers’ Multipurpose Cooperative Society Ltd, Horro Guduru Wollega Zone, Oromia, Ethiopia

Abstract

This research analyzes the financial statements of Embabo Tasfa Farmers’ Multipurpose Cooperative Society Limited, located in the Hababo Guduru District of Horo Guduru Wollega Zone, Oromia Regional State, Ethiopia. The study aims to assess the financial health and operational efficiency of the cooperative, focusing on key performance indicators derived from its financial statements, including the balance sheet, income statement, and cash flow statement. The cooperative was selected purposely, based on the cooperative duration of five years’ work and availability of financial Audited financial statement documents. To attain the objectives of the study the researcher was considered five years audited Financial Statements report with regard quantitative data analysis by using the financial analysis tools; such as common size balance sheet and income statement analysis, trend analysis, funds flow statement analysis, cash flow statement analysis and ratio analysis to attains the objectives of the study over a period of 2018-2022G.C years; for showing the problem areas and for improving the financial performance by taking remedial action. The result of financial statement analysis illustrated that, the financial position of the cooperative has not maintained satisfactory level of financial stability; since most of the liquidity ratio of the cooperative is not sound enough under the study period, to meet its immediate obligation and long term leverage ratio of the cooperative high which shows inadequate borrowings power of the cooperative and the asset utilization of the cooperative is not satisfactory and the cooperative 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 cooperative must decrease administrative expense to maximize profit. The Embabo Tesfa Agricultural multipurpose cooperative has been improving their working capitals efficiency, it should be helping to gain enough profit and save accumulated profit for capital growth in Embabo Tesfa Agricultural multipurpose cooperativ