| Abstract: | Saving and Credit Cooperatives are financial institutions that are owned, controlled and
capitalized by their members. This study was conducted in EEPCO Saving and Credit
Cooperative in Addis Ababa to analyze the financial performance by using the secondary
data disclosed in seven years annual audit reports of the financial statements. This paper
examines the financial performance of the cooperative check up in the framework of
common financial ratios of PEARLS.
The study undertakes to investigate the actual financial performance of saving and credit
cooperatives using financial ratios. For this reason quantitative research method was
employed with special emphasis on ratio analysis suggested by WOCCU, and secondary
data was analyzed by using performance standards of PEARLS.
Findings from the study show that even though Loan loss provision does not meet the
standard, the protection level of the cooperative was in a good position and the cooperative
does not meet the proposed standard, but financial structure shows it is in a good position
that avoids external credit and it satisfies its members need for loan from its saving deposit.
The quality of the asset of the cooperative implies that large portion of fund was tied up on
non-earning asset that affects the profitability of the cooperative. The result of ROA does
not meet the proposed standard because large portion of total asset, saving fund, was keep
in non-earning asset. The Liquidity level shows more than the standard that implies funding
loans to members was only from members saving deposit and the cooperative does not face
any liquidity problem.
Based on the findings the following recommendations are given. Loan loss provision
allowances or insurance for each loan granted be designed, facilitate ways for members to
contribute for the capital building in the form of share, the cooperative uses their capital
productively through extensive marketing, try to use the tied-up fund wisely to generate
income such as investing in share companies, time deposit which yields more interest than
saving interest, and Government |
