Financial Performance of Agricultural Enterprises and Their Determinant Factors in Hadiya Zone, Ethiopia

Abstract

This study seeks to examined and generate findings on financial performance of agricultural enterprises and their determinant factors in Hadiya zone, Ethiopia. The study was performed the financial performance of agricultural enterprises and the determinant factors of 212 MSAEs selected by multi-stage sampling techniques. In addition to these 18 focus group participants and 5 key informants stakeholders were used to sharpen and summarized the data collected from sample to fill the identified research gaps and to address the research objectives of the study. The data were analyzed using descriptive statistics and econometric models including profitability ratio analysis and multiple liner regression analysis techniques. According to the result obtained from profitability ratio analysis 42(67%) of MSAEs found in the study area profitable whereas 70(33%) were incurred loss. The result of multiple liner regression analysis showed that From the independent variables included in the model age of MSAEs, amount of initial capital and access to training were statistically significant at less than 1% significance level; number of employee, experience of manager, access to market, access to premises and access to credit were statistically significant at less than 5% significance level as hypothesized and educational level and entrepreneurial skill were also statistically significant at less than 10% significance level. All statistically significant explanatory variables found in the model had positive relationship with the financial performance of the MSAEs. Recommendations emanating from the study are very important to build up the financial performance of MSAEs to become profitable in the business and also to transform them into higher level of enterprises. To improve the financial performance of enterprises beyond the impact of challengeable constraints, all concerned bodies should give high attention to update and initiate entrepreneurial skill by applying innovative training, ensure experience and best practice sharing system, allocate proper capital and employee, upgrade education level attained and create alternative market access, facilitating sufficient premises and credit access, monitoring and evaluation of all benefit generated and costs incurred as well as effective utilization of employees to ensure successful financial performance of the MSAEs.

Keywords: MSAEs, profitability ratio analysis, multiple liner regression