Economic Analysis of Return on Investment and Solvency of Small-Scale Agro-Processing Enterprises in Benue State, Nigeria

Obiabo; Benjamin Michael; Iheanacho; Andrew Chikaodi; Ali Ocholi

doi:10.56201/ijssmr.v10.no9.2024.pg67.76

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Economic Analysis of Return on Investment and Solvency of Small-Scale Agro-Processing Enterprises in Benue State, Nigeria

Obiabo, Benjamin Michael, Iheanacho, Andrew Chikaodi, Ali Ocholi

Abstract

The study was carried out to assess the interactions between annual return on investment and solvency positions of small-scale agro-processing enterprises in Benue State, Nigeria. Data were collected by means of structured questionnaires. Data for the study were collected from a sample of 38 respondents selected through Multi-stage sampling technique. Descriptive statistics, financial ratios, multiple regression analyses were used for realizing the objectives of the study. F-statistics was used to test hypotheses of the study. The results revealed that, most (89.5%) of the agro–processing enterprises had annual return on the investment less than or equal to one (i.e ? 1.00) with the mean annual return on investment of 0.45kobo. Agro– processing enterprises that use cereals as their raw materials had the highest return on investment of 0.65kobo. This is followed by those that use fruits (0.48), root crops (0.23), and tuber crops (0.22). The coefficient of total revenue was significant at 1% and positively related to return on investment, while the coefficient of total fixed cost was significant at 5% and negatively related to return on investment. There was a significant difference (F = 2.596; P< 0.1) in the return on investment of agro–processing enterprises that use tuber crop, root crop, cereal crop, and fruit crop as raw materials. Majority (60.5%) of the agro–processing enterprises had solvency position less than or equal to 0.5 (i.e ? 0.5) with the mean solvency position of 2.73, indicating that on average, N 2.73 of every Naira worth of assets owned by agro–processing enterprises was financed with borrowed money in 2021. In conclusion, Agro – processing in the study area is profitable with an average return of 45 kobo for every N1 invested. Based on the findings, the study recommended that efforts should be made for the agro–processors to come together and form cooperative societies in order to easily access available c

Keywords

Return on InvestmentSolvencyAgro-processing EnterprisesBenue State

References

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Economic Analysis of Return on Investment and Solvency of Small-Scale Agro-Processing Enterprises in Benue State, Nigeria

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