CHAPTER I

INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Co-operative is an association of two or more than two people that is established for
achieving common goal of associated people and serving people and society. It is a service
oriented business that collects scattered funds from small business and individual and
provide fund to needed ones as a loan at a reasonable interest rate and flexibility of term and
conditions.
In the society various resources are available in dispread condition. Cooperative plays
important role to accumulate those resources in one single place so that lives of rural people
can beenhanced with respect of economic and social aspects. Cooperative businesses have
contributedso many sectors of society and business such as collection of funds, housing
loan, business loan, and development of saving and investment habits in general people.

Financial structure refers to composition of short-term debt, long term debt and equity
capital of any firm. Short-term debt includes such as customers’ saving, accounts payable,
short term bank loan, trade credit, certificate of deposits, deferred income etc. Long-term
debt encompasses bond, debenture and term loan of bank. And, equity capital includes
common stock, share premium, retained earnings and general reserve of the firm. In this
study we will study about features, natures, significance, and performance of financial
structure of Karmashil Saving and Credit Co-operative in term of cost of funds and profit.
Financial structure is financial foundation of business, therefore I would like to study on
‘Financial Structure’ to analyze and identify possible performance of financial structure and
its impacts on different operational activities. It will enables, entrepreneurs and managers,
to form a financial structure and provide foundation for analyzing financial position of firm
to investors for investing and dealing with the firm.

The objectives of this study are providing general information about financial structure and
different sources and cost of funds of any co-operatives. It also aims to analyze how funds
can be allocated in different assets, and analyze performance of firm in terms of earnings
per share and dividend per share
 2

A business that is not financially sound, that cannot survive for a long time in a market.
Conversely, a business with financially sound that can manage funds for investment, and
grab market opportunity for organizational growth and benefit. Therefore, a sound financial
structure is most essential for a sustainable existence and growth of the organizations. It
shows the way of how funds can be collected.
1.2 PROFILE OF THE ORGANIZATION
Cooperative is an association of two or more than two people that is established for
achieving common goal of associated people and serving people and society. It is a service
oriented business that collects scattered funds from small business and individual and
provide fund to needed ones as a loan at a reasonable interest rate and flexibility of term and
conditions.
Financial co-operatives include credit union, saving and credit cooperative, and
cooperatives bank that enables easy access of saving and credit at low cost to general
people. Financial cooperatives contribute to alleviation of poverty through proving loans to
remote public at low cost, and flexible term and condition. Access to credit to finance
micro, small and medium enterprise generates employment and incomes.

Manank Saving and Credit Cooperative Limited is established in 2068/09/09 B.S. under co-
operative act 2048 and co-operative rule 2049 with the aim of proving financial services and
earning profit through collecting funds and advancing different loans to its members. It is
located in Godwari municipality 02 , Attariya . Initially, it was established with the
cooperation of twenty-five member (eighteen male and seven female), where as current
period total no. of members are 119 (104 male and 15 female). It had 1 employee in first
date and current date it has a manager and two marketers. The opening is made by the
immediate chair-person Mr. Bed Prakash Pandey. This co-operative all transactions started
at when received article of registration by the letter of the co-operative department dated in
2068-11-15(B.S.). On the first date end (2068) of the establishment it’s paid up capital was
Rs.125000 while authorized capital was Rs.600000. At current year (2081), it has
authorized capital increment and fixed to Rs.2500000, whereas paid up capital accessed to
Rs.2212500. Issued capital is equal to paid up capital. There was a board consisted 11
members. Moreover seven member advisory boards account committee of three members a
district representative and a legal advisor are executive body.
 3

It has worked in different financial activities such as collecting funds as deposit, advancing
loans for different purpose for example, loan for business, loan for housing etc. It also
contributed in developing saving and banking habits in general people.

This co-operative is a single purpose organization. Its investment sector is agriculture,

business, household and small industry only. Similarly, its investment and operations area is
word no.02 and 01 of Godwari municipality. Under this, co-operative rule is 6% interest
provide on deposit and collect interest 16%on loan(excluding 2%service
charKarmashige).This cooperative rule is, at first make membership card (buy share) to get
loan facilities, where as to get loan uptoRs.25000 at first buy shares of Rs.5000,similarly get
loan up toRs.50000 at first shares of Rs.10000 and get loan facility uptoRs.100000 at first
buy shares of Rs.30000.

Manank Saving and Credit Co-operative Limited is providing various saving and loan
schemes which is playing great role in the development of business. The various saving and
loan schemes.
1.3 bjectives of the Study
Objective is a final destination of any work or activities. It serves as a stimulus factor which
ignites a researcher to conduct research work to find out the results. It directs research work
towards the research objectives. Therefore, this study has also some objectives. They are as
follows:
1. To acess the trend of ROE, ROA, Profability, Laverage Ratio , Current ratio,Liquidity
ratio of Manank Saving and Credit Cooperative Limited.
2. To describe ratio of Manank Saving and Credit Cooperative Limited.

1.4 Rational of the Study

Most of the commercial banks are located and operated in urban area. They have not
expanded their branches in rural area, and are not willing to provide loan to small business
without collateral. In this context, Co-operatives play an important role in collecting funds
from small business, individuals and rural people. More over, it provide loan to small
 4

business and needed peoples without collateral at lower interest cost and flexible terms and
conditions.
Financial structure is the foundation of any business and organizations for smoothly and
effectively operations. It shows sources of needed funds and way to collect funds and
allocate in different assets. Thus, to have information and knowledge about financial
structure is most important for an entrepreneur to establish an organization. Manank Saving
and Credit Cooperative ltd. is one of those which collecting deposits and advancing loans to
small business and individuals. The study on financial structure of Manank Saving and
Credit Cooperative enables managers and newer entrepreneur of co-operatives, to form a
financial structure and establish their new co-operative. And, it also provides foundation for
analyzing financial position of firm to investors for investing and dealing with the firm.

Performance evaluation is the most crucial aspects of any organizations that depict
performance of a certain period of time. In this study, performance of Manank Saving and
Credit Co-operative is evaluated in terms of earnings per share and dividend per share of the
organization. It will help to evaluate organizational performance to board of director
committee, and existing and potential investors of the organization. It also assist customer
for getting service from the co-operative. Finally, it will contribute in organizational, social,
and academic area in evaluation and performing different research work.
1.5 REVIEW OF LITERATURE
Literature review refers to study of previous research work, book, and articles with the aim
of knowing the research issue in detail and find out appropriate methodology. It helps to
develop a framework for the Research study, collections of data and presentation of that
data which can be used to analyze, conclude data and interpretation.
The literature review is a summary of previous research on a topic. The literature review
surveys articles and other sources relevant to a particular area of research or interest.
Withinthe review, it provides a description, summary and critical evaluation of each source.
The literature review may also identify gaps or controversies in the literature and topics
needing further research.
Joshi(2018) has conducted study entitled, “Financial Structure of Manank Saving and Credit
Cooperative”, pointed out the financial structure of the co-operative in different fiscal year
and related earnings per shareand dividend per share. The study has indicated that regular
 5

collection of saving from customers, efficient advancement of loan, a sound investment in

fixed assets, better customer service; proper monitoring of advances and appropriate
marketing strategies are the secrets behind the success of banks.
Pandey(2019), conducted research on the topic “A Study on Capital Structure of Malakheti
Saving and Credit Co-operative”, concluded that capital structure is the foundation that
build a base for operating an organization, optimal capital structure reduces cost of funds
and increase market price of share, simultaneously.
Karki (2016) has conducted research on the topic “A Study on Allocation of funds in
Different Assets of Chaukidada Saving and Credit Co-operative”, the study has concluded
that funds from long-term source for example equity capital should be invested in fixed
assets and saving of customers and retained earnings should be invested in advancing
different loan to shareholders.
Raju and Dhurba (2019) have conducted research on the topic "Financial Structure and
Operating Efficiency of Housing Cooperative Societies”. This report has explained that
Housing co-operatives contribute to the social-economic growth of a country. They are
voluntary in concept and owner-user and based on members’ loyalty. Therefore, this study
sought to establish the relationship between financial structure and operating efficiency on
housing co-operative Societies in Nairobi City County, Kenya. The data collection form
was used to record data of all the elements of financial structure and operating efficiency
from audited financial statements. Housing co-operatives, which constituted 49.8% of
response rate were analyzed using a two-stage process: data envelopment analysis and
regression analysis. The first stage involved the use of DEA model to compute the
efficiency scores, which were regressed in the second stage using linear regression analysis.
The results from DEA output indicate that most of the housing co-operatives were
inefficient while the regression results indicated that a positive and significant relationship
existed between financial structures and operating efficiency. Therefore, this study
recommends that housing co-operatives should formulate strategies that would grow their
operations to reduce operational costs and enhance management efficiency. Besides, there is
a need for housing co-operatives' boards of directors to make prudent investment decisions
that would help members’ maximize social and economic goals.
 6

Patel(2014) has conducted research on the topic "Capital Structure- A Comparative Study of
Cooperative Society". The study has stated that the capital structure is the mix of equity and
debt fund. Capital structure can influence not only the return of a Cooperative societies
earnings for its stakeholders, but also helps in determining the financial position. There are
two most Successful in Valsad District source of fund which a Cooperative society can get
finance owned capital (equity) and borrowings (Debt). An optimal debt equity mix gives a
healthy result of the financial wealth for the Cooperative societies. This was the main
threshold of the capital structure forecasting and planning. The main aim of present study is
to comparatively analyze the capital structure of the Cooperative Society with special
reference to Pindaval Cooperative society and Karchond Cooperative society. The research
study is descriptive and analytical research which is conducted on the basis of secondary
data. The present study is based on the analysis of Six years annual reports of Cooperative
Societies from 2008-09 to 2013-14. The study was conducted for some Cooperative Society
which has the policy of using trading on equity.
1.6 RESEARCH METHODOLOGY
Research refers to the process of systematic inquiry or investigation into a particular
problem or issue that leads to new or improved knowledge for solving problems.
Methodology refers to the way of conducting any task or work which provides efficiency in
completing the task.
Research methodology describes the method and process applied in the whole subject of the
study. It refers the various sequential steps to be adopted by a researcher in study of
problem with certain subject or topic. It is a systematic and well organized way to conduct
research work for solving the problem.
A systematic research study requires a proper methodology to achieve the predetermined
objectives. This study has also conducted by definite methodology to achieve the set
objectives, so this chapter has been attempted to present basic frame of methodology of
research work within which the research will be conducted.
1.6.1 Research Design
Research design is the conceptual structure within which research is conducted. It
constitutes the blue print for the collection, measurement and qualities of data. It helps to
allocate the limited resources by posing crucial choices in methodology. It is the plan and
 7

structure of investigation so conceived as to obtain answer to research questions. This study

has used descriptive research design.
In this study has collected financial data of different fiscal year of Manank Saving and
Credit Co-operative viz; equity capital, debt capital and short-term debt, present data in
table and figure, analyze and conclude for finding the results. In this process, the study has
used different financial and statistical tools for analyzing and interpreting the arranged data
for getting conclusions.
The data and information of the study are concerned with the field study. Research design,
thus, is the overall framework for the achievement of the goals and objectives of the
research. For this purpose balance sheet, and profit and loss statement isanalyzed to get the
result.
1.6.2 Population and Sampling
The entire collection of all observation of co-operatives of Nepal is the population of the
study. It covers 34,512 cooperatives of Nepal. Sampling is the practice of selecting group of
co-operatives considered to be represented the entire population. The study has taken
Manank Saving and Credit Co-operative as a sample. Though, the sample size is very small
in comparisons to the total population, sufficient efforts have been made to make the sample
representative by analyzing different aspects of the co-operative.
1.6.3 Nature and Source of the Study
This study is mainly conducted on Secondary data. The important secondary source of data
is; Company’s annual report , Internet based information , Journals , Published information
on finance, Internal circulation booklets, Company Websites, Financial statements.
1.6.4 Data Collection
Data collection is the process of gathering and measuring facts and information on targeted
variables in an established structure. Data is most important factors of the research work. It
helps to find out accurate results from research.
Mainly, data are two types, they are; primary data which contains data collected by the
researcher himself going in the related field, and secondary data which contains published
annual report, articles, government reports etc.
 8

1.6.5 Data Analysis Tools

In this project work for getting better analysis; Ratio analysis, percentiles and averages will
be used and it will be presented with the graphs and charts for the better understanding.
1.7 limitation of the study
Potential weaknesses of the study that have been identified difficult to avoid or minimize
during the study are termed as limitations of the study. They are as follows:
i. The project will be constrained by the time limit.
ii. The study will be based on secondary data.
iii. The study is based on only one co-operative
iv. This is also the first time attempt of the research. So, there may be error.

CHAPTER II
RESULT AND ANALYSIS

2.1 DATA PRESENTATION AND ANALYSIS

Data presentation is the act of arranging data in tables, charts and figure. It makes easy for
understanding and analyzing data for accurate results. A researcher presents data in
different ways for effective research work. Analysis is the process of describing things or
issues after looking and thinking the issues or events. Analysis and interpretation is most
essential for identifying strengths and weakness of a firm through properly established
relationship between two variables. Analysis and interpretation yields some conclusions that
will be useful for decision making. There are number of tools and techniques which are
generally used in data analysis such as statistical tools, financial tools, accounting tools etc.

It is a process of establishing the meaningful relationship between the variables of financial

statements with the objectives of identifying the financial structure, and operational
strengths and weakness, the process both includes analysis and interpretation.

Financial planning is the most crucial aspects of the business planning. Financial planning
involves determining financial structure and sources of funds. Financial structure is the
foundation of any business and organizations for smoothly and effectively operations. It
provides funds for investing in different assets and projects in order to exploit market
 9

opportunity. Therefore, sound financial structure is most essential for achievement of the
organizational objectives.

Financial structure refers to composition of short-term debt, long term debt and equity
capital of any firm. An appropriate financial structure is base for the business that enables to
run smoothly. Under the analysis of results obtained from different aspects of study, one
should certain the following topics viz. Introduction of the study research. This section
involves the background of the study. Also it explains about brief profile of the
organization. Likewise the objectives of the task also should be comprised here in this
section. Then another step is about the presentation and analysis of the data collected from
different sources. This segment of the task explain about the data presentation, also it
involves analysis of the result and this explains about the major findings of the research
study. Finally it is necessary to summarize and conclude the whole study in some shortcut
methodology. While summarizing and concluding, candidate should focus on the summary,
similarly conclusions are also comprised there. Lastly the sources of data study are taken
under reference sections.
As mentioned in the earlier chapter, various ratios are applied to judge the financial viability
of the MSACCL. The following ratios are used to analyze and check the financial position
of the cooperative

2.1.1 Liquidity Ratio

Profitability of a cooperative is more closely related to liquidity of all cooperative than any
other business firm. Since it has to gain confidence from depositors and customers which is
the largest sources of fund as well as earning. Liquidity ratio measure the firm's ability to
pay its short-term obligation. It also assets solvency of the company and its ability to retain
solvency even in difficult times. In case of cooperative, short-term obligations are current
deposit, saving deposit, short-term loan and source of meeting this obligation are cash and
bank balance, money at call and short-term notice, investment in government securities and
bill discounted and purchase . There is compulsion in cooperative sector to maintain cash
and bank balance as directed by the Nepal Rastra Bank. From legal perspective cash and
bank balance to total deposit ratio show actual liquidity position of the cooperative where as
other liquidity ratio are also useful.
 10

The liquidity ratio can be analyzed under the following four classifications
2.1.1 Current Ratio
This ratio applied to test solvency as well as in determining short-term financial strength of
the cooperative. The current ratio indicates the availability of current assets in rupees for
very one rupee of current liabilities. This ratio more than 2.1 is satisfactory. It is computed
as dividing current assets by current liabilities. The current ratio of the cooperative for this
report is calculated as follows:

Table No.1 Current Ratio(Times)

Fiscal year Current assets (Rs) Current liabities Ratio
(Rs)
076/77 62883277.30 59229877.38 1.18
77/78 65475526.86 59165470.39 1.27
78/79 64414294.70 36812112.75 1.74
79/80 75506001.68 39832223.53 1.84
80/81 89906001.77 49838723.87 1.96
Source: Annual Report of MSACCL
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Current Ratio
100000000
90000000
80000000
Axis Title 70000000
60000000
50000000
40000000
30000000
20000000
10000000
0
076/77 77/78 78/79 79/80 80/81
Current assets (Rs.) 62883277.3 65475526.86 64414294.7 75506001.68 89906001.77
Current liabities (Rs.) 59229877.38 59165470.39 36812112.75 39832223.53 49838723.87
Ratio 1.18 1.27 1.74 1.84 1.96

Figure No.1 Current Ratio (Times)

Current Assets = Bank + cash + other current assets + prepaid expenses
Generally, higher current ratio indicates better liquidity position and 2:1 considered
satisfactory. But here in the context of cooperative this ratio is less than 2:1 but we
considered it satisfactory because cooperative always have more liquid current assets than
other types of organization. Here in the context of Source: Annual Report of MSACCL. The
current ratio of 2076/77 is 1.18, 2077/78 is 1.27, 2078/79 is 1.74, 2079/80 is 1.89 and 1.96
is 2080/81. It indicates that the liquidity position of the cooperative has increased with
comparison to the year 2080/81.
2.1.2 Net working capital to total assets
Net working capital represents the amount of short-term liquidity available to a firm so we
use the ratio of net working capital to total assets to measure short-term solvency. It is
calculated as:
Table No. 2 Net working capital to total assets
Fiscal year Net working Total assets(Rs.) Ratio
capital(Rs.)

076/77 2899407.8 6894566.22 0.052

 12

77/78 3192504.5 67969994.44 0.047

78/79 2310947 68031312.70 0.034

79/80 5240994 78129250.95 0.0671

80/81 6250988 88124250.77 0.0781

Source: Annual Report of MSACCL

Chart Title
100000000
90000000
80000000
70000000
Axis
60000000
Title
50000000
40000000
30000000
20000000
10000000
0
076/77 77/78 78/79 79/80 80/81
Net working capital(Rs.)
2899407.8 3192504.5 2310947 5240994 6250988
Total assets(Rs.) 6894566.2267969994.4468031312.778129250.95
88124250.77
Ratio 0.052 0.047 0.034 0.0671 0.0781

Figure No. 2 Net working capital to total assets

In the year 2076/77 the net working capital to total assets ratio is 0.052. It implies that part
of current assets financed with long terms funds represent 5.2percentage of the total assets.
And in the2080/81 the net working capital to total assets ratio is 7.81percentage which is
highest in the total study period. Therefore the year 080/81 was good for the co-operative.
 13

2.1.3 Capital Structure/Leverage ratio

Leverage ratio is also called structure ratio. It is the solvency ratio too. It is calculated to
measure the long term financial position of a firm, debt and equity. This ratio measures the
solvency long term debt from equity.But it is context of Source: Annual Report of
MSACCL. There is not long term liability. And here we have calculated the solvency of
fixed deposit by its equity under leverage ratio. The following ratio are calculated:
2.1.4 Equity Multiplier
The equity multiplier(EM), also known as the leverage factor, simply states the relationship
of total equity of a firm. It measures the extent to which the total assets of a firm is greater
than the firm's equity capital. It is calculated as:

Table No.3 Equity Multiplier

Fiscal year Total assets (Rs.) Total equity (Rs.) Ratio

076/77 6894566.22 12780000 5.8233
77/78 67969994.44 11890000 5.7166
78/79 68031312.70 12880000 5.2819
79/80 78129250.95 14280000 5.4712
80/81 88124250.77 15970000 5.5631
Source: Source: Annual Report of MSACCL

Equity multiplier shows the relationship of total assets to total equity of a firm. In the
2080/81 the equity multiplier is 5,5631.it is denoted that the total equity of the firm is 18.28
percentages of the total assets. In year 078/79 the equity multiplier is 5.2819, which is
decreased in comparatively previous year similarly the equity multiplier in last fiscal year is
5.8233, which is at increases trend.
2.1.5 Profitability Ratio
Profitability is the end result of a number of corporate policies and decisions. It measure
how effectively the firm is being operated and managed. Owners and managers of firm are
interested to know the profit earning capacity of the firm. Particularly, owners are eager to
know their returns whereas managers are interested in their operating efficiency. So they
calculate profitability ratios because expectation of both owners and managers are
 14

evaluated in terms of profit earned by the firm. Besides owners and managers, creditors are
also interested to know the financial soundness of the firm. So creditors also use the
profitability ratios. Following are the major ratios used to measure the profitability of a
firm.
2.1.6 Return on Assets
The return on assets (ROA),which is often called the firm's return on total assets, measure
the overall effectiveness of management in generating profit with its available assets. The
higher the firm's return on assets the better it is doing in operation and vice versa. It is
calculated as follows:

Table No.4 Return on Assets

Fiscal year Net income (Rs.) Total assets (Rs.) Ratio

076/77 2001234.53 6894566.22 0.0221
77/78 2122408.70 67969994.44 0.0312
78/79 2851097.65 68031312.70 0.0419
79/80 3544853.46 78129250.95 0.0454
80/81 4545856.77 88124250.77 0.0511

The return of assets is 2.21percentage in the beginningof total study period. And 5.11
percentage in the year 2080/81. The highest ratio is 5.11 percent represent the
2080/81.Return on assets shows relationship between net income and total assets .In case of
co-operative the return on assets was increases year by year, it is strengthens of co-
operative. The return on equity (ROE) measures the return on the owner's investment in the
firm. The owners' investment refers to the equity capital employed by the firm. It indicates
common stock , paid in capital and retained earnings. Higher ratio of return on equity is
better for owner. Is is calculated as follows:

Table No. 5 Return on Equity

Fiscal year Net income (Rs.) Total equity (Rs.) Ratio
 15

076/77 2001234.53 12780000 0.1193

77/78 2122408.70 11890000 0.1785

78/79 2851097.65 12880000 0.2214

79/80 3544853.46 14280000 0.2482

80/81 4545856.77 15970000 0.299

Net Income & Total Equity

Equity Ratio
18000000
16000000
14000000
12000000
10000000
8000000
6000000
4000000
2000000
0
076/77 77/78 78/79 79/80 80/81
Net income (Rs.) 2001234.53 2122408.7 2851097.65 3544853.46 4545856.77
Total equity (Rs.) 12780000 11890000 12880000 14280000 15970000
Ratio 0.1193 0.1785 0.2214 0.2482 0.299

Figure No. 5
Return on Equity
The Return on Equity is 11.93percentage in the year 2076/77, 17.85 percentage in year
2077/78, 22.14 percentage in year 2078/79, 24.82 percentage in year 2078/79 and 29.9
percentage in year 2080/81. In 078/79 return on equity of the co-operative was 22.14 t
shows that the relationship between net income and equity was not bad.
2.2 MAJOR FINDINGS
This assignment work report has been prepared as per the format prescribed by the subject
lecturer and entitled "financial performance of MSACCL." This report has been divided into
 16

three chapters as 'Introduction', Data Analysis and Presentation' and 'Summary and
Conclusion' this main chapter constraints various subjects. The main part of this report is
presentation and Analysis of Data. For the data analysis purpose Ratio Analysis tools have
been used to evaluate the performance of the cooperative. The major finding of the study is
as follows:
1. From the study, we found that MSACCL is overall beneficial co-operatives in the
city area and profitability position of the co-operatives is much satisfactory.
2. From the liquidity ratio, we found that the co-operatives is strong position to its
shorter obligation and moreover the co-operatives is increasing its shorter solvency
power for short-term liabilities from current assets.
3. From the annual report we found that the co-operatives has not taken more long term
loan from different commercial bank.
4. From the activity ratio we found that the co-operatives has utilize its deposited
efficiently in the productive sector. The co-operatives has invested high percent of
the available funds to generate incomes.
5. From the profitability ratio we found that the cooperatives is in profitable condition
because of its good financial performance, the cooperatives has generated profit the
financial activities.
 17

CHAPTER III
SUMMARY AND CONCLUSION
3.1 SUMMARY
Financial structure refers to composition of short-term debt, long term debt and equity
capital of any firm. Short-term debt includes such as customers’ saving, accounts payable,
short term bank loan, trade credit, certificate of deposits, deferred income etc. Long-term
debt encompasses bond, debenture and term loan of bank. And, equity capital includes
common stock, share premium, retained earnings and general reserve of the firm.
Co-operative is an association of two or more than two people that is established for
achieving common goal of associated people and serving people and society. Saving and
credit co-operative are strong means for the development of the nation. It collects funds
from different areas and grants loans to public, and it provides employment opportunity to
public.
In this study, we studied about general financial structure of organizations, and financial
structure of Manank Saving and Credit Co-operative. In the course of studying financial
structure, I did literature review of different previous researcher and books. Data are
collected from annual reports and audit reports of the co-operative, and presented in
different table and figure for effective research work and attractive presentation. Observing
the presented data, financial structure of MSACCL has consisted typically; short-term debt
and equity capital.
Study on the selected topic reveals that co-operatives funds can be raised from shareholders
and depositors of the co-operatives which are equity capital and debt capital, respectively.
The study shows performance of MSACCL is not satisfactory level. Its EPS and DPS is not
stable.
3.2 CONCLUSION
Financial structure refers to mix of short-term debt, long term debt and equity capital of any
firm. Short-term debt includes such as customers’ saving, accounts payable, short term bank
loan, trade credit, certificate of deposits, deferred income etc. Long-term debt encompasses
bond, debenture and term loan of bank. And, equity capital includes common stock, share
premium, retained earnings and general reserve of the firm.
 18

Manank Saving and Co-operative is a financial organization that collects funds from its
shareholders and saving customers. Its main financial structure is composition of short-term
debt and equity capital. Its earnings per share are volatile. After analysis the overall capital
structure Manank Saving and Credit Co-operative Ltd. Following conclusions are drawned:
1. Financial structure of MSACCL is composition of short-term debt and equity
capital.
2. Co-operative has not used any long term debt yet.
3. Main source of debt is saving from customers, and it is in increasing trend.
However, it seems decreased in fiscal year 2079/080.
4. It's market share or customers are increasing so that deposit also in increasing trend.
5. Interest from loans is main source of income whereas interest on saving deposits is
expenses of co-operative. Its spread income is in increasing trend.
6. It has only provision for dividend to its shareholders.
7. Its financial performance is weak to some extends in terms of EPS and DPS.
8. It seems contribution of debt capital in total capital is higher than equity capital.
9. It has no detailed planning program and policies for achieving the goals or
objectives.
 19

BIBLIOGRAPHY
Annual report (2073-2080) of Manank Saving and Credit Co-operative Limited.
Asmita Books Publishers & Distributors (P) LTD.
Gautam, Pandey B., Baral, Rishi R., Joshi, Padam R., Paudel, Raju B., and Rana, Surya B. (2016),
Fundamentals of Corporate Finance. Kathmandu: Asmita Books Publishers & Distributors
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