Research Journal of Economics & Business Studies - RJEBS - The ...

Financial Performance analysis of GOHE Co-Operatives Savings and Credit
Union in Bure Woreda, Ethiopia
Dr. Sambasivam Yuvaraj, Associate Professor, Department of Management,
College of Business and Economics, Debre Markos University, Debre Markos, Ethiopia
Mr. Biruk Ayalew Wondem, Lecturer, Department of Accounting and Finance,
College of Business and Economics, Debre Markos University, Debre Markos, Ethiopia
Abstract
This study was conducted in Gohe Cooperatives Saving and Credit Union in Bure Woreda to analyze
the financial performance by using the data set disclosed in four years annual audit reports of the
financial statements and questionnaire Survey that was carried out on 132 general assembly member
representatives to collect information on the saving mobilization strategies efficiencies and loan
services. Participatory discussion with management boards; and in depth interview with control
committee, manager, and accountant were carried out on saving mobilization and loan services of the
union on how they are mobilizing members saving and delivering quality credit to members. This
paper examines the financial performance on the financial health, sign of growth trends, efficiency of
saving mobilization and the loan services strategies. The health check up and sign of growth trend
conducted in the framework of most common financial ratios of PEARLS on the basis of available
financial data concludes that ‘Gohe’ has unhealthy position on liquidity; inadequacy of capital; though
healthy assets quality in delinquency non-earning assets are greater than the standard set by the
WOCCU model. The efficiencies of saving mobilization & loan service, however, the union able to get
good members attitude and perception on saving security, return on members saving, professional
services, credit appraisal technique and loan service the union faces the problem of loan able funds,
absence of technical assistance of professionals, and sometimes members were not able to pay loan
repayment on the due date, limitation in providing diversified services.
Key words: Asset Quality, Capital Adequacy, Financial Structure, Liquidity, Loan, Saving, sign of
Growth.
1. INTRODUCTION
Cooperation has been the very basis of human civilization. The inter-dependence and the mutual help
among human beings have been the basis of social. It is the lesson of universal social history that man
cannot live by him-self and for him-self alone. The spirit of association is essential to human progress.
Since the beginning of human society individuals have found advantage in working together and
helping one another; first in foraging, then in hunting later in agriculture and still in manufacture
(Krishnaswami and Kulandiswamy, 2000). Cooperative is a user-owned and user controlled business
that distributes benefits on the basis of use. More specifically, it is distinguished from other business
three concepts or principles: first, the user owner principle. Persons who own and finance the
cooperative are those that use it. Second the user-control principle. Control of the cooperative business
is by those who use the cooperative. Third, the user benefits principle. Benefits of the cooperative are
distributed to its user on the basis of their use (Cobia, 1998).
The current government of Ethiopia has put agriculture at the heart of its policies. There is a particular
emphasis on promoting adoption of fertilizer, improved seeds and the efficiency of input marketing
and distribution. In order for cooperatives to meet their stated objectives they should have properties
and funds. The sources of the funds are different. That is used to acquire assets and also to run the
activities of the societies. Unless the properties and funds of societies are managed according to the
www.theinternationaljournal.org > RJEBS: Volume: 02, Number: 06, April-2013 Page 57