Financial Analysis Of Agricultural Co-Operatives In Abia State

ABSTRACT

This work was designed to study the financial analysis of Agricultural Cooperatives in Abia state. Specific objectives include among others to analyze the financial structure of co-operative societies in the study area. Both primary and secondary sources of data were used in the study. Primary data was collected with the use of questionnaires from 69 respondents who were randomly selected. Secondary data were collected from the balance sheet of 20 cooperative divisions in the state as at 31st December 2001. In analyzing the data collected, simple statistical tools where used. Financial ratios including current ratio, Acid-test ratio and DebtEquity ratio were also used. The result obtained from analysis revealed that there are 11 types of cooperative societies in the study area and their sources of finance are government grants, contribution from members' and loans from financial institutions. Results obtained from current ratio and acid- test ratio reveal that only one cooperative division which constitute 5% of the cooperative division could meet with there current obligations, similarly the Debt-equity ratio show that only one cooperative division (5%) is credit worthy. The other 95% cannot borrow from financial institutions. The implication of the finding is that shareholders run the risk of loosing their equity and the lenders run the risk of not recovering their loan. In such a situation based on the finding, it was recommended that cooperative should depend more on internally generated funds, government and financial institutions should study the repayment capacity of the cooperatives with respect to their activities before giving loans to them and cooperatives should seek financial management advice.