A STUDY ON FINANCIAL POSITION

OF
Bandhu Bikash Multipurpose Co-operative Limited
Birendranagar 6, Surkhet

By
Himani Salami Magar
B.B.S. 4th year
T.U Reg. No. 7-2-1094-034-2016
Exam Roll. No. 10940023

Submitted To:

Office of the Dean

Faculty of Management
Tribhuvan University

In the partial fulfillment of the requirements for the Degree of

Bachelor of Business Studies (BBS)

Siddhapaila Campus,

Surkhet

2020

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 CHAPTER 1
INTRODUCTION
1.1Background

The word co-operative is formed by two words 'co' and 'operative'. 'Co' means

together and 'operative' means to do the work so phonetically meaning of co-operative

is to do work by co-operating many people together. This word is used to think co-

operative many people together. For will being of many people. Generally co-

operative is that work which is done by the many people whose economic condition is

weak. The purpose of co-operative is not for profit it is for service.

Those people whose economical resources are low can't fulfill their requirement

alone. But those condition and purpose is organization is that organization which have

co-operative feeling which is established by some people jointly. In cooperative aim

of all members is equal. All members do this work to fulfill their determined goal.

Co-operative is defined in many ways:

According to the definition of labor organization, "co-operative is the organization of

such person who has limited resources which can be total as vocational organization

and it has contained democratic factor so person do the work to fulfill simple

economical or every person has given one part of essential capital."

Likewise, according to Prof. Herry Clavert, "co-operative is a form of organization

where is person voluntarily annotating together a human being on the bank or equality

for the promotion economic infers them".

Co-operative organization is organized by those people whose economical condition

is weak. The collect resources in common place and use together to fulfill their

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purpose. This organization is established to get rid of absorption.

1.1.1 History of the Co-operative

The co-operative movement began in Europe in the 19th century, primary in Britain

and France, although The Shore Porter Society claims to be one of the world's first

cooperative, being established in Aberdeen in 1498 A.D. (although it has since

demutualize to become a private partnership). The industrial revolution and the

increasing mechanism of the economy transformed society and threatened the

livelihoods of many works. The concurrent labor and social movements and issues

they attempted to address describe the climate at the time.

The first documented consumer co-operative was founded in 1769 A.D. in a barely

furnished cottage in Fenwick, East Ayrshire, when local weavers manhandled a sack

of oatmeal into John Walker's whitewashed front room and began selling the contents

at a discount, forming the Fenwick Weaver's Society.

In the decades that followed, several cooperative or cooperative societies formed

including Lennoxt own Friendly Victualling Society, founded in 1812 A.D. By

1830A.D. there wear several hundred co-operatives. Some were initially successful,

but most cooperative founded in the early 19th century had failed by 1840A.D.

However, Lockhurst Lane Industrial co-operative society (founded in 1832 A.D. and

now Heart of England Co-operative Society), and Galashiels and Hawick Co-

operative societies (1839 A.D. or earlier, merged with the cooperative Group) still

trade today.

It was not until 1844 when the Rochdale Society of Equitable Pioneers established the

"Rochdale Principles" under which they ran their cooperative, that the basis for

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development and growth of the modern cooperative movement was established.

Financially, credit unions were incented in Germany in the mid -19th century, first by

Franz Hermann Schulze-Delizsch (1852A.D. Urban), then by Friedrich Wilhelm

Raiffeisen (1864 A.D. Rural). While Schulze-Delitzsch is chronologically earlier,

Raiffeisen has proven more influential over time -see history of credit unions. In

Britain, the friendly society, building society, and mutual saving bank were earlier

forms of similar institutions.

Robert Owen (1771-1858 A.D.) is considered as the father of the cooperative

movement. A Welshman who made his fortune in the cotton trade, Owen believed in

putting his workers in a good environm+ent with access to education for themselves

and their children. These ideas were put into effect successfully in the cotton mills of

New Lanark Scotland. It was here that the first co-operative store was opened.

Spurred on by the success of this, he had the idea of forming "villages of co-

operation" where workers would drag themselves out of poverty by growing their

own clothes and ultimately becoming self-governing. He tried to form such

communities in observation in Scotland and in New Harmony, Indian in the United

States of America, but both communities failed.

In Britain rocked there are 21 employers in 1855 A.D. co-operative organization is

established. By that way in our country Nepal their also established co- operative

organization in Chitwan district by Bakhan Shing Gurung at first time. There are more

than 26600 co-operative organizations. More than half century pass but there is no

chance in financial behavior so there was co-operative Act in 2048 B.S. from that all

low income people joint without inter fear and with democratic way.

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There are different types of rules and regulation to run co-operation organization in

various countries. These rules are managed according to their own working style. The

principle of co-operating is organization on the basis of those rules. The principle of

co-operative is beginning change and developed according to the demand of time.

1.1.2. Introduction of Bandhu Bikash Multipurpose Co-operative

Limited

Bandhu Bikash Multipurpose Co-operative Limited registered in Division Co-

operative Office, Surkhet on Shrawan 30, 2063 B.S. under Co-operative Act 2048

B.S. The registered number of this co-operative is 46/062/063 .Now, there are 500

shareholders and 2000 members in this co-operative limited. This co-operative

completed its 15th Board of Meeting. The total capital of the co-operative was Rs.

38,101,200. Mr. Ganesh Kumar Basnet is chairperson and Mr. Prabeshman

Manandhar is manager of Bandhu Bikash Multipurpose Co-operative Limited. The

co-operative run at Surkhet valley.

This co-operative is now conducting its activities from its office located in Ward no.6

of Birendranagar Municipality of Surkhet district. This co-operative was established

to unite the scattered small capitals in the society with the concept of co-operation and

conduct the capital for the good will of the members of the co-operative and to

implementation of capital member each other all side exhaust of member for creative

programs with economic, social, cultural qualitative and quantitative change.

The main sources of income of this co-operative is the capital collected by issuing the

shares and the interest from the loan provided to the members along with the saving

of the shareholders in different topics. The interest obtained from the bank account is

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also the source of income of this co-operative.

This co-operative has invested the amount collected from different sources in

different fields. It provides the loan at low interest rate. This cooperative has

provided the loan into six types: trade loan, agriculture loan, medicine/treatment loan,

educational loan, household loan and account guarantee loan. BBMCL collects an

interest of 17% for trade loan, 16% for agriculture loan, medicine loan & educational

loan, 17% for household loan and additional 3% account loan.

Like as that, it has provided the facilities to its members by saving their amount.This

co-operative provides an interest of 9% for 6 month's period, 11% for 1 year's period,

12% for 2 year's period, 13% for 3 year's period and 14% for 4 year's period in

saving.

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 1.1.3 Organizational Structure of Bandhuu Bikash Multipurpose

Cooperative Limited

Bandhu Bikash Multipurpose Cooperative Limited has the functional committee of 13

members including manager, office assistant for saving, sub-office assistant for loan

and 10 market representative.

General Meeting

Functional Committee Account Committee

Staff Service Center Women Mobilization

Administration Managing Sub- Committee Sub- Committee

Loan Education Project Supervisor

Sub-Committee Sub- Committee Sub-Committee

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1.1.4 Objectives of BBMCL

The Objective of Bandhu Bikash Multipurpose Co-operative Limited are listed below.

 To stimulate the members about interdependency and self belief.

 To provide loan to members for productive and incomputable purpose.

 To receive surplus regularly from members to get interest on competitive rates

in their surplus.

 Conduct daily activities according to the co-operative act and rules.

 Help in income capacity and increase the members and to get information

about income.

 To fulfill their own objectives to help local, regional, national and

international organization, and common objectives.

 Increasing the mutual help and economy a promotion to get regular saving of

member who are involved in the organization and the local people.

1.1.5 Functions of BBMCL

The Functions of Bandhu Bikash Multipurpose Co-operative Limited are given

below.

 Surplus collection, loan motivation and other economic activities.

 Agriculture related work.

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  Social, cultural, development and environment protection work.

 Health related work.

 Herb related work.

 Dairy product related work.

 Educational work.

 Transaction of useful product related work.

 Electricity related work.

1.2 Statement of problem

The function of co-operative limited is not only confined to do its usual functions but

also to do something for the development of the economy. The development of the

country depends upon its economic status. The deposit of the co-operative are

increasing each year but due to improper accounting system, the co-operatives are not

able to handle their transaction properly. So, to fulfill this gap, this report was

prepared to find out the accounting system of Bandhu Bikash Multipurpose Co-

operative Limited and to suggest some recommendations for other co-operatives and

financial organizations on the methods of accounting. This study was carried out to

find out the answers of the following questions:

a. What is the profitability position of BBMCL?

b. What is the liquidity position of this co-operative?

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c. What is the turnover ratio of BBMCL?

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1.3 Objectives

The general objectives of this study are to examine the financial position of Bandhu

Bikash Multipurpose Co-operative Limited in Surkhet are the specific objectives are

given below:

a. To explore the financial position of Bandhu Bikash Multipurpose Co-operative

Limited.

b. To analyze the financial activities of Bandhu Bikash Multipurpose Co-operative

Limited.

c. To give recommendation for improvement of organizational activities.

1.4 Rationale

While conducting any studies, it should be taken into consideration about the sort of

importance that the study will provide. Likewise, the importance of this study is as

follows:

a. The study will help those who want to know the financial condition of Bandhu

Bikash Multipurpose Co-operative Limited.

b. The study will be significant to those who wish to carry out the report comparative

financial analysis of other co-operative.

c. The study will serve as a guideline to other students and researcher to carry out the

report on the same field.

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2.1. Conceptual Review

Financial performance analysis which help to are shareholder to understand the

historical financial position and the firm's further prospectus. The "Annual report is

the major annual document issued by a corporation to its shareholder. There are

different financial performances such as ratio analysis, profitability analysis, assets

analysis, liquidity analysis etc.

The financial analysis are the medium by which a company discloses information

concerning. Its financial performance. Ratio analysis, profitability analysis, liquidity

analysis, assets analysis are four common financial reports. Which are prepared on the

basic of Generally Accepted Accounting Principal (GAAP). The income statement

presents the summary of revenue expenses and net income of the firm during the

given period. Financial ratio analysis is an evolution of both firm's past financial

performance and its prospect for future. Financial analysis typical involves the use of

ratio, comparison which prior periods and with the budget and other such procedure.

Financial performance are used by various parties such as investors employer lenders

suppliers and other trade creditors customers the government and its agencies the

published and donors etc. They use financial performance is order to satisfy their

different needs for information. There for the understanding of financial performance

is important for investor and the firm's management.

Financial performance is the documents, which contains financial information about

profitability ratio, liquidity ratio and turnover ratio during the accounting period.

Ratio analysis is one of the techniques of financial analysis to evaluate the financial

condition and performance of a business concern simply, ratio means the comparison

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of one figure to other relevant figure. According to Myers, "Ratio analysis of financial

performance is a company. They use the ratio analysis to work out a particular

financial characteristics of the company is which they are interested. Ratio analysis

helps the various group in the following manner.

To work out the profitability accounting ratio help to measure the profitability of the

business by calculating the various profitability ratio it helps. The management to

know about the earning capacity of the business concern in this way profitability ratio

show the actual performance of the business there no big increase in profitability

ratio of show Leyland but returns are more than last year in other side cripple

decrease in profitability ratio in the profit margin and returns are good. No major

change is profitability ratios.

2.1.1 Meaning of Cooperative

The word co-operative is formed by two words 'co' and 'operative'. 'Co' means

together and 'operative' means to do the work so phonetically meaning of co-operative

is to do work by co-operating many people together. This word is used to think co-

operative many people together. For will being of many people. Generally co-

operative is that work which is done by the many people whose economic condition is

weak. The purpose of co-operative is not for profit it is for service.

2.1.2. Principal of Cooperative

The International Cooperative Alliance (ICA) has prescribed the following seven

principals of cooperative from the 7th annual summit held in Manchester in 1995.

Almost all countries of the world follow these principles.

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  Voluntary and open membership

 Democratic control

 Economical participation

 Autonomous and self control

 Education, training and information

 Cooperation among cooperatives

 Concern to society

2.1.3 Financial Ratio Analysis

Financial ratio analysis is an evaluation of both firm's past financial performance and

its prospect for future. Financial analysis typically involves the use of ratios,

comparison with prior periods and with the budget and other such procedure.

According to I.M. Pandey, "Financial analysis is a process of identifying the financial

strength and weakness of the firm by properly establishing relationship between the

item of balance sheet and the profit and loss account."

3. Methodology

3.1 Types of Research

Generally, two types of research there are Quantitative and Qualitative. The

researcher is use Quantitative research. In natural science and social sciences,

quantitative research is the systematic experiential investigation of observable

phenomena via statically, mathematical or computational techniques. The objectives

of quantitative research are to develop and employ mathematical models, theories and

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hypothesis pertaining to phenomena. The process of measurement is central to

quantitative research because it provide the fundamental connection between

empirical observation and mathematical expression of quantitative relationships.

Quantitative data is any data that is in numerical form such as statics, percentages etc.

The researcher analyzes the data with the help of statistics. The researcher is hoping

the numbers will yield an unbiased result that can be generalized to some larger

population. This research is quantitative research.

3.2 Types of Data

To carry out the analysis and bring out the results of the study, it is very necessary to

data. There are two types of data;

 Primary data

 Secondary data.

In this project report, researcher has been used secondary data only.

3.3 Data Collection Procedure

The data were mainly collected from the two sources; primary sources data and

secondary sources data. In this research the researcher use secondary data only.

Secondary data are collected through available literature, such as newspaper, books,

existing journals, research books etc. For the preparation of this report, secondary

data were collected with the help of annual report of the co-operative, article,

brochure etc.

3.4 Instruments

The instruments mostly used on research are Questionnaires, Observation tools,

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Survey tools. Key Informants (KI) Focused Group Discussion (FGD), Research

Interview etc. In this research, observation tools are used. Observation method a

method of collecting data where researcher observes analyzed and interprets the

events or works personally. Researcher does not ask the questions but observes the

events and keeps the record of important information and facts.

3.5 Techniques of Analysis

Data analysis techniques means that tools the research used for present and analyzed

the data.

 Tabulation

 Bar Diagram

 Profitability ratio

 Liquidity Ratio

 Turnover Ratio

3.6. Limitations

The following study was limited within the following points:

a. This report work has been done only using some of the financial ratio.

b. The researcher analyzed the data of three fiscal years (2073/074 to 2075/076).

c. The study was based on only secondary data.

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