Browsing by Author "Hagos, Alem (Phd)"

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    Deteriminents Of Balance Of Payment In Ethiopian Economy
    (A.A.U, 2021-07) Haile, Bedelu; Hagos, Alem (Phd)
    This study assessed the determinants of balance of payment performance in Ethiopia using time-series data for the period 1996 – 2019 using the Johansen Cointegration test, Vector error correction model and the Granger causality test. The study adopted restricted VAR model which had lag two as the maximum lag to estimate the relationship between balance of payments in Ethiopia and previous balances in balance of payments account, external debt, inflation rate, Foreign Direct Investment and political instability. The VECM model showed that all variables and their lags were highly significant in determining the balance of payment in Ethiopia. On the other hand , a positive relationship was found between current balance of payment and previous balance of payment at first leg, differenced FDI, differenced External debt, differenced inflation rate and foreign direct investment at first differenced lag. The study analysis to get a significant long run relationship between BOP, FDI, Inflation rate, external debt and political instability. Political Instability and inflation rate are short run relation between BOP. Political instability translated to unfavorable situation in the current balance of payment in Ethiopia. On the other hand, Balance of payments is negatively influenced by External debt and political instability and positive influenced by FDI and Inflation rate. The study recommended that the Government of Ethiopia, National bank of Ethiopia, all financial institutions and other stakeholders whose activities influence External debt and political stability ought to apply relevant policy measures for better management of Ethiopia’s balance of payment. Policies that encourage domestic investments, foreign direct investment and increased trade earnings can be effective in rising GDP growth and reducing dependence on external debt for sustained economic development
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    The Effect of Working Capital Management on Profitability of Manufacturing Firms in Ethiopia: With Reference To National Alcohol and Liquor Factory
    (A.A.U, 2021-06) Filketu, Sisay; Hagos, Alem (Phd)
    The ultimate objective of any firm is to maximize wealth. However, the preservation of the liquidity of a firm is an important objective too and it is the efficient management of the various components of working capital that helps to preserve liquidity. However, problem lies in the efficient management of these various components that makes up the working capital by managers. The objective of the current study is to investigate the effect of working capital management on the profitability of alcohol and liquor firms with reference to National alcohol and liquor factory. The study was limited to the effect of working capital management on the profitability of alcohol firms in Ethiopia with reference to National alcohol and liquor factory and also limited to cash conversion cycle, average collection period, inventory conversion period, and average payment period as measures for working capital management determinant, and firm size, current ratio, and leverage as control variables that affect profitability of firms. The study covered the period of ten (10) years (i.e. from 2011-2020). The study adopts explanatory research design with quantitative research approach. The target population of this study was liquor factories operating in Ethiopia and this study used convenience sampling method and selected National alcohol and liquor factory for its convenience for availability of audited annual financial reports for the study periods. This study employed the use of secondary source of data. The secondary data was derived from audited financial statements of National alcohol and liquor factory. The data collected using the data collection instrument was presented using tables and analysed using percentages, means, and standard deviation in line with the objectives of the study. The data was cleaned, coded, and entered in to Microsoft excel 2010 and Eviews 8 for analysis. The study used descriptive statistics, correlation and multiple regression analysis to establish the relationship between the independent variables of working capital components and the profitability of firms. The regression results investigated a negative significant relationship between average collection period and inventory conversion period and profitability of national alcohol and liquor factory. Also, the regression results examined constant effect of cash conversion cycle on profitability of national alcohol and liquor factory. Additionally, the study revealed that there is a positive significant relationship between firm size and current ratio and profitability but firm leverage has a negative significant relationship with profitability of national alcohol and liquor factory. The study also revealed significant positive relationship between average payment period and profitability of national alcohol and liquor factory which indicates that delaying paying creditor’s increases profitability. The study concludes that a relax debt collection policy reduced profitability of national alcohol and liquor factory. Further, the study examined that firm size and current ratio have a significant positive relationship with profitability but firm leverage is found to have insignificant negative relationship with profitability. This indicates that firm size and current ratio enhances profitability while firm leverage inversely affects profitability. Hence, the study concludes that firm size and current ratio enhances while firm leverage negatively affects the profitability of national alcohol and liquor factory. Based on the result the study recommends that national alcohol and liquor factory managers should speed up the collection of receivables so that they can maximize profits. In addition, the study recommends that the factory should avoid holding excessive stocks since this would reduce profitability.
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    Effects of Capital Structure on the Performance of Ethiopian Commercial Banks in Ethiopia
    (A.A.U, 2021-01) Tilaye, Tazebew; Hagos, Alem (Phd)
    Among the foremost important and crucial decisions for any business is about capital structure since it has significant influence on financial performance of a company. The objective of this paper was to analyze the effects of capital structure on the financial performance of selected Ethiopian Commercial banks. To achieve the research objectives, the researcher would use a panel data analysis, and has adopted a purposive/judgmental sampling approach. During this study, the researcher would use only secondary data and document review for collecting data from annual reports of five (5) selected Commercial banks over the past ten (10) years period from 2010 to 2019. Besides that, the data was analyzed by using a multiple regression model on a quantitative approach. The study has used return on assets (ROA) which is one of an accounting-based measure of financial performance as a dependent variable, and other five capital structure measures, these are; total debt ratio (TDR)), loan to deposit ratio (LDPR), and deposit to asset ratio (DPA) are as independent variables, and bank’s size, and growth as control variables were used. Random effect estimation model was applied for the panel data analysis through EViews 10(64x) statistical package. The result indicates that capital structure as measured by total debt to total asset indicates that it had a positive relationship with profitability measured by ROA and statistically significant at 5% level. Theoretically it was supported by tradeoff theory. Besides, loan to deposit ratio had positive relationship with profitability (ROA) and statistically not significant at even 10% significant level. It was also supported by trade-off theory. To the contrary, deposit to asset had negative relationship with profitability of banks with strongly statistically significant at 1% level measured by ROA. Theoretically it was supported by pecking order theory. On the control variables, growth and asset size had a negative relationship with profitability, and statistically significant. The result shows that the Ethiopian Commercial banks have confidence on total debt financing which maximizes banks profitability, and such banks instead of other sources should keep their financing focus to deposits. The result of growth and size in this study call for Commercial banks and higher-level managers to give attention and be efficient to maximize profitability of bank because the cause is related to efficiency of both the management and managers.