Abstract
This article covers a financial evaluation of 31 representative agricultural co-operatives. Although the ratio of the members' interest to the total assets remained reasonably constant during the study period, the share capital and reserves decreased relatively to the total assets. According to the financial evaluation, it is clear that there is a high gearing ratio, because about 75% of the total capital structure consists of loan capital. Although the asset structure showed no substantial change, the composition of current assets (which represented about 75% of the total assets) changed significantly. The debtors increased considerably whilst a decrease in the inventory cancelled this increase. Therefore it is apparent that the co-operatives fulfil the functions of financial institutions to a large extent. Looking at the liquidity position, the current assets increased relatively to the current liabilities, while a defensive financing policy was applied because the fixed assets, investments and intangible assets were financed by long-term capital. An analysis of the turnover ratios showed that the amounts of the total assets, debtors and current assets increased more rapidly than the sales volume, which may be the result of a more liberal credit policy towards members, the drought in certain parts of the country as well as an over-capitalization of the co-operatives. Although the average profitability was rather low, it must be seen against the background of a service rendered instead of a striving towards a profit. According to available information, it appears that the ability to meet their interest obligations deteriorated seriously since 1982.
Highlights
The ratio of the members' interest to the total assets remained reasonably constant during the study period, the share capital and reserves decreased relatively to the total assets
According to the financial evaluation, it is clear that there is a high gearing ratio, because about 75% of the total capital structure consists of loan capital
Looking at the liquidity position, the current assets increased relatively to the current liabilities, while a defensive financing policy was applied because the fixed assets, investments and intangible assets were financed by long-term capital
Summary
Nagraadse Bestuurskool, Universiteit van Stellenbosch, Posbus 610, Bellville, 7535 Republiek van Suid-Afrika. An analysis of the turnover ratios showed that the amounts of the total assets, debtors and current assets increased more rapidly than the sales volume, which may be the result of a more liberal credit policy towards members, the drought in certain parts of the country as well as an over-capitalization of the co-operatives. 'n Ontleding van die betrokke omloopsnelhede het voorts getoon dat die omvang van die totale bates, debiteure en vlottende bates vinniger as die verkoopsomvang toegeneem bet, wat die gevolg kan wees van 'n moontlike verslapping in die kredietbeleid teenoor die lede, die droogtetoestande in sekere dele van die land asook die oorkapitalisasie van kooperasies. Die finansiele ontleding van die kooperasies asook hulle meegaande kapitaalvorming moet teen die agtergrond van 'n aantal belangrike veranderinge in die betrokke bedryfsomgewing beskou word. Saam met die belastingpligtigheid van kooperasies en die hoe rentekoerse, is die landbousektor in sekere dele van die land ook deur voortdurende droogte getref wat 'n addisionele las op die kooperasiewese geplaas het
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have