An Analysis of the Financial Performance of Selected Savings and Credit Co-Operative Societies in Botswana

Abstract

The co-operative sector plays an important role in a country's socio-economic development. This paper evaluated the financial performance of 9 selected Savings and Credit Co-operative Societies (SACCOSs) in Botswana by analysing audited financial statements of a five-year period from 2008 to 2012. The analytical techniques used include descriptive statistics of financial aggregates and ratios, correlation, regression and common size analyses. The financial aggregates analysed included all items that impact income generation as well as items that represent the financial position of the selected societies. The findings underscored that the selected SACCOSs achieved good financial results and were in strong financial position. The results also indicated a significant relationship between Net Profit ratio and Capital Employed Ratio to inform that the Net Profit Ratio was the most important explainer of Return on Capital Employed. The 5 year common size analysis also revealed a growth in income and in the financial status of the selected societies. The capital structure of these societies was characterised by substantial share of internal funds. Conclusively, maintaining an optimal balance between the interest on loans and interest on members' savings, and investing extra cash in diversified portfolio to reduce the risk levels would make the SACCOSs grow and function more productively and profitably. They would also then succeed in attracting more members and thereby significantly contribute towards poverty reduction and economic diversification drives in the country.

The Mediating Effect of Firm Revenue on the Relationship Between Board Characteristics on Financial Distress of Deposit Taking Saccos in Nairobi County, Kenya

“…This will improve liquidity ensuring that SACCOs are well equipped to meet their financial obligations without default and that they do not encounter financial distress. Sathyamoorthi et al (2016) corroborate the study by identifying the co-operative movement as a critical component of the country's socioeconomic development. Secondary financial data was collected from 9 operating SACCOs with audited financial statements over the 5-year observation period.…”

Capital Structure and Corporates Financial Sustainability: Evidence from Listed Non-Financial Entities in Ghana

“…Sathyamoorthi [23] defined capital structure as the blend of equity and obligations used to fund the resources of corporates. Kennon [24] and Peavler [25] also described capital structure as how institutions prefer to finance their operations by combining equity, debt, or internal funds.…”

The Effect of Liquidity, Solvency and Activities on Profitability in Saving and Loan Cooperatives (SLC) in Klungkung Regency, Bali, Indonesia

“…Receivable Turnover is a ratio used to measure how long it takes to collect receivables for a period or how many times the funds embedded in these receivables rotate in one period (Kasmir, 2018). Previous research has stated that activity has a significant effect on profitability (Sathyamoorthi et al, 2016). On the other hand, activity has a negative and significant effect (Bayu Okiawan, 2018).…”