preview

Evaluation Of A Cooperative Company 's Decision For Pay Out Annual Profits Essay

Better Essays

Introduction
Producers Cooperative serves 9,591 cooperative members within their one hundred miles radius sales territory of Bryan, Texas. Producers had lead their peers in patrons’ capital where their member’s equity as at 2003 was 48.12% of total assets compared to the group average of only 30.55% and the revolving cycle of five years was the shortest compared to the group average of 17.6 years. This cooperative diverse economy of feed, fertilizer fuel and agricultural supplies were also performing greater than their peers as indicated by Producers’ higher gross margin of 18.69 of sales versus the group average of 16.55%.
The purpose of this report is to present the outcomes of the Producers Cooperative board’s decision to pay out annual profits differentially as determined by individual department sales where the desired results and unintended consequences resulted from the decisions are discussed. The discussion on the appropriate performance measure for a cooperative success and evaluation on the option of reducing the cooperative stock’s prices to reduce member’s personal money tied up in cooperative stock for a five year revolving cycle are also carried out.
There are several issues should be taken into account before presenting the outcome of the decision proposed by Deatherage, the General Manager. The imbalanced residual earning to cooperative members had occurred to different profits earned by different sales department. Over the period of 1999 to 2003, supply

Get Access