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Measuring cooperative performance.

Article Excerpt
This financial analysis views the nation's 100 largest agriculture cooperatives, taken as a whole. To get a better picture of the cooperative landscape, this section will focus on performance measures. Selected average ratios are used for this analysis (table 1). The average ratio is used to mitigate the effects of the largest cooperatives on the performance measurements. The average ratio gives equal weight to all cooperatives and provides an additional perspective on the performance of the nation's largest agriculture cooperatives.

Liquidity measurements are used to judge short-term stability of a business. In this analysis, we use the current and quick ratios. The current ratio is current assets divided by current liabilities. This provides an insight into how well the cooperative can meet its current obligations.

The quick ratio is similar to the current ratio except that inventories are excluded from the current assets. Inventory is usually considered the least liquid of these assets. Thus, excluding them from this analysis may provide a more accurate picture of liquidity.

There was no change in the average current ratio for all of the top 100 cooperatives. However, there were variations within the different commodity sectors. Diversified, fruit/vegetable, poultry/livestock and rice cooperatives had some loss in their liquidity, as both current and quick ratios fell. The one exception was the diversified cooperatives, which improved their average quick ratio due to lower inventory levels relative to other current assets. All other commodity groups showed improved liquidity.

Leverage ratios

Leverage ratios provide...