The effect of financial ratios on the profitability of rural cooperatives in Sistan and Baluchestan province using the GLS method

Abstract

Rural cooperatives play an important role in increasing the cultural, social and economic partnerships of the rural population and by improving the provision of services in the field of providing basic necessities and livelihoods of farmers provide the basis for improving the income and employment of farmers. In this regard, the purpose of this study is to investigate the effect of financial ratios on the profitability of 36 active rural cooperatives in Sistan and Baluchestan province in the period 2016-2019 using the GLS method. Findings show that the instantaneous ratio has a negative and significant effect on the company's profitability in the rural cooperative company, liquidity is low and the company should be managed in a recession and a sudden increase in the price of agricultural inputs and basic goods provide the conditions to receive their claims in the shortest possible time. The effect of current debt to equity ratio on profitability has been negative and significant due to the growth of short-term debt, which leads to a decrease in working capital of the company and thus reduces the company's profitability, while the ratio of total debt to equity has a positive effect. And has had a significant impact on the profitability of rural cooperatives That is, most of the company's capital is provided by shareholders and the cost of loan interest is reduced and the company's profitability increases. Finally the ratio of total asset turnover has a positive and significant effect on the profitability of rural cooperatives.

Keywords

• financial ratios
• profitability
• rural cooperatives
• gls method