Financial Performance of Nepal Multipurpose

Co-operative Limited
A Proposal for Project Work Report

Submitted By:
Laxmi Koirala
T. U. Reg. No.
Manakamana Multiple College

Submitted to:
The Faculty of Management,
Tribhuvan University
Kathmandu

In the p ]artial Fulfillment of the Requirements for the degree

Of Bachelor Degree in Business Studies (BBS)
Birtamode, Jhapa, Nepal
Aug, 25

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 A Proposal of Project Work Report

Submitted By
Laxmi Koirala

Submitted To
Manakamana Multiple College,Birtamode

15th September,2022

Table of Contents

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 CHAPTER:1

INTRODUCTION,LITERATURE REVIEW AND RESEARCH

METHOLOGY

1.1 Background of the Study

A co-operative is an autonomous association of persons united voluntarily to

meet their common economic, social and cultural needs and aspirations through a
jointly and democratically controlled enterprise .As self-help organizations,co-
operatives in both developing and developed countries help raise the income and
employment prospects of its members.

The strength and reach of co-operatives are illustrated by the success of both
small and large scale farmers in india who help 11 million families earn part of
income from dairy co-operatives.In Africa,cocacola and coffe growing co-
operatives, which have a comsiderable export market, re-invest profits in their
communicaties to obtain potable water, sanitation facilities and resources for
local villages. Co-operatives are also multi-billion dollar business such as €sunkist
and ocean spray, as well as self –organize artisans are rural farmers.The
associated press,one of the oldest co-operatives, employs 3700 people and
provides current news 121 countries in five languages. Thus, co-operatives can be
a souce for information, credit. Food, social protection,housing, and job creation.

Liquidity describes the degree to which an asset or security can be quickly bought
or sold in the market without affecting the asset’s price.Market liquidity refers to
the extent to which a market,such as a country’s stock market or a city’s real
estate market,allows assets to be bought and sold at stable prices.Cash is
considered the most liquid asset,while real estate, fine art and collectibles areall
relatively illiquid. Cooperative liquidity represents the capacity of a coop to
finance itself efficiently the transactions. The liquidity risk for a co-operative is the
expression of probability of losing the capacity of financing its
transactions,respectively of the probability that the co-operative cannot honor its

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clints. The management of the liquidity risk presents important at least from two
points of view:primarily an inadequate level of liquidity may lead to the need to
attract additional sources of with higher costs reducing profitability of the co-
operative that will lead ultimately insolvency; and secondly and secondly an
excessive liquidity may lead to a decrease of the return on assets and
consequence poor financial performance.

1.2 Profit of the Organization

Nepal Multipurpose Co-operative Society Ltd. Jhapa got established in

1994/03/08. It is located at Mechinagar-10, Jhapa. Its area of operation is whole
of Jhapa District. Its head office is situated in Mechinagar-10,Jhapa. Its current
branches are Birtamode, Chandragadi, Bhadrapur, Itabhatta, Charali, Baniyani,
Saranamati, Dudhe, Sanischare, Dhulabari, Budhabare, Bahundangi, Surunga and
Goldhap . Nepal Multipurpose Co-operative society LTD. Started is operation in
1994/03/08 with a view and objective to provide business diversification and
quality service for financially deprived sector people. Starting with the initial share
capital outlay of Rs.2,55,000 with the energetic 26 member from different family
has now become one of the leading co-operative organizations in Jhapa District.

1.3 Objectives of the study

This study is largely centered on liquidity management which enabled the coop to
determine its liquidity requirement are ensure its ability to meet up the
depositors demand or its financial obligation, thereby maximizing its value. The
specific objectives are:

1. To examine the cost of liquidity and liquidity on the performance of NMC

Coop.
2. To discover the specific factors those are useful in enhancing liquidity
position of the NMC Coop.
3. To find the effect of change in liquidity level on profitability.

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1.4 Rationale

This study is concern with the liquidity management of NMC Coop. It is expected
that this study will significantly contribute toward the field of liquidity
management situation of the co-operative organization . The goal of the study is
to examine the efficiency and performance of NMC Coop as reflected in the
annual financial report.

The researcher will focused analysis of the liquidity management of NMC Coop.
Liquidity management is one of the main problem of Nepalese financial
instituition especially in case of banks. But saving and credit co-operative
contribution also remarkable in Nepalese financial sector.

Liquidity management impact on various sectors i.e. loan, profit etc. among them
it impact on profitability widely. The researcher tried to provide information to
wide range of impact of liquidity on the profitability.

1.5 Literature Review

INTRODUCTON. The term review is very important for the researcher or investor
in the area of concern problem. This is related to the present study with view to
find out what had already been explained and how the present research adds
new dimension to the study. It is an integral and mandatopry process in research
work.

1.5.1 Conceptual Review

An investment is an asset or item that is purchased with the hope that it will
generate income or will appreciate in the future. In an economic sense, an
investment is the purchase of goods that are not consumed tody but are used in
the future to create wealth. In finance, an investment is a monetary asset

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purchased with the idea that the asset will provide income in the future or will be
sold at a higher price for a profit.

Net earning represent the amount of sales revenue left over after all operating
expenses, interest, taxes and preferred stock dividend (but not common stock
dividend) have been deducted from a company’s total revenue.

1.5.2 Review of Previous Work

Nikolau shows that the role of central bank liquidity can be important in
managing a liquidity crisis, yet it is not a panacea. It can act as an immediate but
temporary buyer to liquidity shocks, thereby allowing time for supervision and
regulation to confront the causes of liquidity risk.

Poudel & Khanal (2015) shows that there is a huge gap between co-operatives
with respect to size, earnings, activities,etc and suggest that the co-operatives
should be ranked and categorized according to their size so that a prompt
regulation can be imposed to them. The significant positive correlation of deposit
with variables such as investment, net earnings, size, liquid assets, interest
earnings, interest expenses, etc. revenue and earning, to increase the activities,
etc.

1.6 Research Methodology

This section describes the methods and process applied in entire study. It
sequentially refers to the various steps to be adopted by a researcher.

1.6.1 Research Design

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Research design is a planned structure and strategy of investigation conceived to
obtain answer to research objectives through analysis of data. The first step of the
study is collect necessary information and data concerning to study. Therefore
research design means the definite procedure and technique , which guides the
study and propound ways of doing research. In this way a descriptive and
analytical survey will be done. The justification for the choice of these method id
preferred because it concludes reliable data and information converting a long
time and avoids numerous complex variable . Some recent financial tools along
with statistical tools will be applied to examine fact and techniques will be
adopted to evaluate the liquidity management of NMC COOP.

1.6.2 Population and Sampling

The object of population may be finite or infinite in number and hypothetical or

existence in character. Sample , on the other hand is the representative part of
population selected from it with the objective of investigating its properties. If
some elements are selected with the intention of finding out something about the
population from which they are taken then that group of element is called a
sample. Thus, a sample is just a portion of the universe selected with a view to
draw conclusions about the universe under study. The population of the study
represents the all co-operative organization operating in Birtamode Municipality
and Nepal Multipurpose Co-operative Limited; Birtamode will be selected as
purposive sampling.

1.6.3 Data Collection Procedure

Making study more reliable and justifiable, secondary data has will be used in this
study. The annual reports of the subjected bank are the major sources of the data
for the study. However, beside the annual reports of the NMC COOP, the
following sources of data are also considered.

a) Annual report of the selected coop.

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 b) Various publications dealings in the subject matter of study.
c) Various article published in the newspaper.
d) Different websites.

1.6.4 Data Processing and Analysis

Following tools have been employed in this study.

 Current ratio
 Quick ratio
 Cash to current assets ratio
 Cash to liabilities ratio
 Cash to current liabilities
 Cash ratio
 Net working capital ratio

1.7 Limitation

Every work has its own limitations due to lack of time, resources and knowledge.
The work has been completed within the periphery of the limitations. Despite
ample efforts on the part of the researcher, this study was limited to :

1. This study will be based on secondary sources of data i.e. annual reports of
the NMC COOP, Nepal Rastra Bank and government publications and other
related journals. Thus, the result of the analysis depends on the
information provided by the concern offices.
2. The scope of research will be only NMC COOP.

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 3. Finding will be based only on the three fiscal year’s data (2076/77 to
2078/79) of NMC COOP.

BIBLIOGRAPHY

Khanal, Subash and Poudel, Gyanendra ‘A study of liquidity and interest spreed in
Nepalese Cooperative Societies.’ A work paper published in SSRN.

Nikolaos Gerantonis et al 2009, ’Can Altmon Z-score Medels predict business

failures in Greece?’, Research Journal of International Studies, issue. 12, 21-28.

Pradhan, Radhe Shyam, (1986) “Management of Working Capital”, New Delhi

National Book Organization.

Google.com

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