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educational loan, appliances loan, micro-finance, agri/production loan, commercial loan, housing

loan, and vehicle loan. Baug CARP Beneficiaries Multi-Purpose Cooperative produces their own

products too, and sells them through their consumer store. Products available in the consumer

store are sugpo/bangus fry, lime, fertilizers, tea-seed powder, feeds for sugpo/bangus, and other

fish pond inputs. Baug CARP Beneficiaries Multi-Purpose Cooperative is also the first

cooperative in Caraga region that has its own ATM machines.

The objective of this research study is to know the financial ratio analysis of Baug CARP

Beneficiaries Multi-Purpose Cooperative (BCBMPC) .The findings of this study would be used by

Baug CARP Beneficiaries Multi-Purpose Cooperative (BCBMPC) management as an aid for the

presentation of the financial performance of the cooperative and to keep it in check for possible lapses.

The results of this study were expected to propose improvements for Baug CARP Beneficiaries

Multi-Purpose Cooperative (BCBMPC). This prompted the researchers to conduct this study on

Financial ratio Analysis of Baug CARP Beneficiaries Multi-Purpose Cooperative (BCBMPC).

Conceptual Framework

This study is anchored to the Performance Report Standards for Cooperatives Series 2013 by

Cooperative Development Authority (2013), which states that financial statements can be analysed

through the use of financial ratios which are profitability performance, institutional strength, structure of

assets, and operational strength. In figure 1 shows the schematic diagram of the study, Financial Ratio
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Analysis of Baug CARP Beneficiaries Multi-Purpose Cooperative. The first box contained

the needed inputs which are audited financial statements – balance sheets , statement of cash flows and

income statements. The second box is the financial ratio analysis in terms of profitability performance,

institutional strength, structure of assets, and operational strength.

Balance Sheets. A balance sheet reports a company's assets, liabilities and shareholders'

equity at a specific point in time, and provides a basis for computing rates of return and

evaluating its capital structure. It is a financial statement that provides a snapshot of what a

company owns and owes, as well as the amount invested by shareholders.

Income Statements. An income statement is a financial statement that reports a

company's financial performance over a specific accounting period. Financial performance is

assessed by giving a summary of how the business incurs its revenues and expenses through both

operating and non-operating activities. It also shows the net profit or loss incurred over a specific

accounting period.

Statement of Cash Flows. The statement of cash flows as defined by Valix (2013) is a

basic component of the financial statements which summarizes the operating, investing, and

financing activities of an entity. In simple language, it provides information about the cash

receipts and cash payments of an entity during the period. .

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Financial ratio analysis as required by CDA:

 Profitability Performance:

o Profitability Ratio

o Earnings per Share Ratio

o Asset Efficiency Rate

o Rate of Interest on Share Capital

 Institutional Strength :
Audited Financial Proposed
o Net Institutional Capital
Statements of BCBMPC Improvement
 Structure of Assets:
for the year 2016-2017:
o Percentage of Non-Earning
 Audited Balance Assets to Total Assets
Sheet
o Members’ Equity to Total
 Audited
Audited Statement
Assets
of Cash Flow
o Deposit Liabilities to Total
 Audited Income
Assets
Statement
o External Borrowings

o Receivables to Total Assets

 Operational Strength :

o Solvency

o Liquidity

Figure 1 Schematic Diagram of the Study

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Profitability Performance. It measures the company’s ability to generate earnings relative

to sales, assets and equity. This is taken into account because it assesses the ability of a company

to generate earnings, profits, and cash flows relative to some metric, often the amount of money

invested. This ratio also highlights how effectively the profitability of a company is being

managed.

Profitability ratios are financial metrics used by analysts and investors to measure and

evaluate the ability of a company to generate income (profit) relative to revenue, balance sheet

assets, operating costs, and shareholders’ equity during a specific period of time. They show how

well a company utilizes its assets to produce profit and value to shareholders.

Earnings per share (EPS) ratio measures how many dollars of net income have been

earned by each share of common stock. It is computed by dividing net income less preferred

dividend by the number of shares of common stock outstanding during the period. It is a popular

measure of overall profitability of the company and is usually expressed in dollars.

Profitable growth rate is the combination of profitability and growth, more precisely the

combination of Economic Profitability and Growth of Free cash flows.

Asset Efficiency Rate is also called asset turnover ratio that measures the efficiency of a

company's assets to generate revenue or sales. It compares the dollar amount of sales or revenues

to its total assets. The asset turnover ratio calculates the net sales as a percentage of its total

assets
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Institutional Strength. Institutional strength may be conceptualized along stability. By

stability, we mean durability. Institutions are stable to the degree that they survive not only the

passage of time but also changes in the condition.

Structure of Assets. This the proportions of various types of asset held by a firm as shown

in the balance sheet. A firm's asset structure helps to determine the way in which finance is

raised, in particular the balance of long-term loans and short-term debt.

Operational Strength. A company's strengths are the tools used to counter threats and

seize opportunities, so thoroughness is important. A company might possess cutting edge

technology, facilities located in strategically important areas, low waste and production capacity.
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Statement of the Problem

This study is focused on the financial ratio analysis of a multi-purpose cooperative in Surigao

City. Specifically it seek to answer the following questions:

1. What are the financial ratio analyses as to:

1.1 Profitability Performance;

1.2 Institutional Strength;

1.3 Structure of Assets;

1.4 Operational Strength;

2. Based on the findings of the study what improvement may be proposed?

Assumption

The financial ratio analysis has a significant bearing to Baug CARP Beneficiaries Multi-

Purpose Cooperative proposal improvements.

Significance of the study

The findings of the study will be beneficial and significant to the following:

Multi-purpose cooperative. The findings of this study will help cooperatives assess their
financial performance.
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Investors. It will help the investors determine whether their investments will be returned with
profit.

Future members. In a cooperative, the members are the owners. This study will prospect
members decide in considering membership.

Community. Cooperatives are made for and have an impact to the community.

Future Researchers. The findings in this research will be useful for future studies.

Scope and Limitations of the Study

The study is focused on the financial ratio analysis of BCBMPC Surigao Branch the

setting of the study is located in the city of Surigao. The independent variables considered in this

study are Baug CARP Beneficiaries Multi-Purpose Cooperative’s the needed inputs which are

audited financial statements – balance sheets, statement of cash flows and income statements.

The dependent variables are the financial ratios in terms of profitability performance,

institutional strength, structure of assets, and operational strength.

Definition of Terms

Financial Ratio - a financial ratio or accounting ratio is a relative magnitude of two

selected numerical values taken from an enterprise's financial statements.

Financial Ratio Analysis - a ratio analysis is a quantitative analysis of information

contained in a company’s financial statements. Ratio analysis is used to evaluate various aspects

of a company’s operating and financial performance such as its efficiency, liquidity, profitability

and solvency.
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Multi-Purpose Cooperative - the multipurpose cooperative society has large number of

functions to discharge. As the name indicates its responsibility for different purpose for which it

has been set up. It can work for arranging credit, improved seeds, agricultural implements,

fertilizers, sanitation, health etc. for its members. Normally it discharges the following functions.