| Abstract: | This study was conducted under the title “Assessment of Financial
Performance Analysis in the Case of Awash, Nile and Nyala Insurance
Companies”. Its main objective was to analyze and to compare the
performance of Awash, Nile and Nyala Insurance Companies of with industry
average with respect to liquidity, Asset efficiency, profitability and long term
solvency for the period 2011-2016. This study employed ratios (10 in total)
such as Current Ratio (CR), Asset Utilization (AU), Income to Expense Ratio
(IER) and Operating Efficiency (OE), Return on Asset (ROA), Return on
Equity (ROE), Debt to Equity Ratio (DER), and Debt to Total Asset Ratio
(DTAR), and Equity Multiplier (EM). The liquidity measurement showed
Nyala had shown better performance while Nile performance was slightly
better than the industry average. On the other hand, Awash had shown lower
performance, as compared to the industry average. Awash and Nile asset
management efficiency had shown to be lower as compared to the industry
average. Meanwhile, Nyala had shown an extraordinary performance as
compared to the industry average. This study also found that all results of
profitability measures went in favor of industry average except as compared to
Nyala. The results indicated that Awash and Nile were less profitable than
industry average. However, Nyala and Nile had shown an outstanding
performance of solvency through the five consecutive years while Awash
performance was as equivalent to the industry average. The study also
indicated that Awash and Nile should have to hold high quality liquid asset
and converted them in the event of liquidity shortage and should improve their
asset management efficiency by in generating revenue or disposing unutilized
asset, if any. They must also considering improvement in their profitability
ratio by reducing their operating expenses. On the other hand, Awash should
improve its debt management ratio. This can be achieved by increasing asset
while keeping liabilities constant. |
