Published in Scientific Papers. Series "Management, Economic Engineering in Agriculture and rural development", Vol. 17 ISSUE 1
Written by Joseph Chimere ONWUMERE, Chinonso Henry ENE, Esther Chioma ACHILIHU

This research work was carried out to identify and analyze the liquidity status and performance of farming and non-farming enterprises of rural households in Abia State. A multi-stage sampling technique was adopted to select 100 household enterprises comprising of farming, non-farming and a combination of the both. Simple descriptive statistics, profitability ratios and multiple regression models were employed in the data analysis. The profitability and liquidity results showed that farming and non-farming enterprise households respectively made a Return on Equity such that 14.2% and 16.5% returns were obtained from equity investments. The result on Return on Assets shows that 3.1% and 7.1% returns were made on assets by farming and non-farming enterprises respectively implying that assets were efficiently used by non-faming enterprises. The current ratio stood at 1.562 and 1.722 for farming and non-farming enterprises. Similarly, the quick ratio was 1.091 and 1.100. The enterprises were able to cover short-term liabilities. The savings, income and investment variables were majorly influenced by the operators’ individual characteristics such as age, education, level of experience while macroeconomic variables like disposable income also exerted significant influence. It was therefore recommended that government pursues relevant monetary policies that will reduce interest rates paid on long-term debts as well as tame high inflationary pressures prevalent in the country. Firms must be take serious care in ensuring that the limit to which they can incur debts so as to avoid running into deficits and bankruptcy. As a rule, the enterprises must allow debts provided their solvency is not jeopardized. Government should pursue policies that will make these enterprises optimize available liquidity in the domestic economy as well as increase their return on equity.

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