Accounting and Finance Dissertation

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    Factors Affecting Profitability in the Airlines Industry: an Empirical Study on Major Airlines in Sub-Saharan Africa
    (Addis Ababa University, 200-06) Menta, Fikre; Gebrehiwot, Gebremedhin
    This study examines the airline-specific, industry-specific and macro-economic factors affecting airline profitability for the three airlines in Sub-Saharan Africa, covering the period of 2003-2013. To this end, the study adopts a mixed methods research approach by combining financial reports and further documentary analysis for qualitative information. The findings of the study show that load factor and exchange rate fluctuation have statistically significant and positive relationship with airlines’ profitability. On the other hand, variables like leverage and liquidity have a negative and statistically significant relationship with airlines’ profitability. However, the relationship for airline size, sales growth and major incidents/shocks is found to be statistically insignificant. The study suggests that focusing and reengineering the airlines operations alongside the key internal drivers could enhance the profitability. Moreover, airlines in sub-Saharan Africa should not only be concerned about internal structures and policies, but they must also consider the macroeconomic environment in developing business strategies to improve their financial performance or profits
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    Auditors Professional Responsibilities and Legal Liability with Regard to Private Auditors in Ethiopia
    (Addis Ababa University, 2007-07) Beyene Muluneh; Kinfu Johannes
    This study was conducted on the Ethiopian private auditor’s professional responsibilities and legal liability, in comparison with those developed countries auditing principles and standards. The paper tested the responsibilities of the management and the auditors with regard to preparation of the financial statements and subsequent discovery to misstatements to the audited financial statements in Ethiopia. The paper qualitatively estimated to what extent private auditors exercise their professional and legal responsibilities. The paper also tested the legal consequences on auditors as a result of those violated professional and legal responsibilities. Besides it tested that to which auditors are liable for the violation of contractual and statutory responsibilities. Further the study tried to explore the constraints related to private auditors in exercising their responsibilities. Finally, not the least the paper explored some cases related to Ethiopia private auditors' practices
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    Loan Provision, Degree of Collectiblity and Reason for Default: A Case Study in Wise Saving and Credit Cooperatives Union for Women
    (Addis Ababa University, 2008-01) Merkuriaw Meron; Yitayew Abebe
    This paper entitled “Loan Provision, Degree of Collectiblity and Reason for Default in case of WISE Saving and Credit Cooperatives Union for Women” examined the loan provision, collection procedures as well as the default rate of this SAC. Today a number of Saving and Credit Cooperatives(SACs) are established to give a saving and loan service to clients and much emphasis is given for those women who wants to run SME. WISE’s major clients are women who would have an impact on changing their own life as well as their families. The study attempted to identify and assess the loan provision criteria’s, collection procedures, the reason for default, the impact of interest on the cooperatives and clients, and last but not the least the benefits and challenges of the SAC under WISE. Data for the study was collected through questionnaire, interview and discussions with four cooperatives members and credit officers who are situated in Nefas Silk sub-city. Results of the study indicate that in order to give loan to a woman WISE have set criteria’s so as to decrease the default rate. A woman has to save money and has to provide a business plan in order to be given the requested loan, after being a member of the SACs. The study revealed that the level of education of the borrowers reduces the default rate in turn facilities heavily the collection procedures. The study also indicates that the interest charged has a great impact on clients which makes them to reduce the amount of loan they want to take
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    Pre Shipment Loan Utilization in Exporting Agricultural Products in Ethiopia
    (Addis Ababa University, 2008-01) Negash Mekbib; Yitayew Abebe
    International trade continues to grow every year as nations expand their global sales and new nations join in. Today, over 225 nations are active in trade resulting in over $9 Trillion dollars in global business every year. Ethiopia, though existing part is small in amount, is one of those nations that incessantly increase their contribution in this global business. However, in Ethiopia, as in some other African countries, the export business is dominated by agricultural products accounting roughly for 70-80 per cent of export earnings. One of the common complaints, from Ethiopian agricultural product Exporters, is that they receive minimal support from their banks for export trade transactions. After spending significant time and resources to develop export sales, they often can not secure the funds they need to complete the orders. Thus a key finance service specifically required by these exporters is a short term working capital loan that is used to fulfill international sales orders. Consequently, the main purpose of this study was assessing the utilization of pre- shipment loan by agricultural product exporters in Ethiopia; focusing on those products which hold the highest fraction in the export business. The result of the study in general suggests that the provision of pre shipment working capital credit is characterized by a continuous increasing trend with annual average growth rate of 147% for three consecutive years from 2004- 2006.Although the provision of pre shipment working capital loan increases more than 100% annually, it still constitute small percentage of the total loan provided by the banks. And also the amount of pre shipment export credit in the study period is found to be very low relative to the total export value in the same period. For this reason the researcher suggests that, in order to satisfy needs of exporters in the country and benefit from the opportunities in the international market by expanding the export business, the disbursement of pre shipment credit should be increased more than what actually exists. This can be achieved through encouraging and supporting commercial banks to provide the loan to small and medium emerging exporters who have little experience and knowledge about the foreign trade; easing the requirements of both the commercial banks and government guarantee schemes; facilitating other export financing mechanisms; enhancing the capacity and experience of emerging agricultural product exporters about the international business; and strengthening and increasing the capability of those sectors which are organized with the aim of expanding the export sector in Ethiopia like Ethiopian export promotion agency
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    Merger: Valuation Process and Evaluation of Financial Performance in Case of United Insurance Company and Shama Plc
    (Addis Ababa University, 2008-01) Bayou Jemaneh; Yitayew Abebe
    This paper entitled “Merger: Valuation process and Evaluation of Financial Performance” circulates around the key issues in merger valuation and financial performance of merged companies before and after merger. The objective is to identify the rationales of merger, strategic and financial intents of mergers and evaluate the performance of merged companies before and after merger. The data used in the study was obtained through questionnaire and interview with the executives of merged companies. In addition, the deed of merger and financial statements are thoroughly investigated to understand the merger process and financial performance of the merged companies. The performance 5 years before merger and 5 years after merger are investigated using financial statement analysis. In order to substantiate the result t- test was used for hypothesis testing The study finding indicates that the major merger motive is enhancing profitability. It is also found that the merger process is simply pooling the audited financial statements of companies going for merger. The study analysis made both by financial statements analysis and the hypothesis testing made shows that performance of firms after merger has not increased as compared to the performance of firms before merger
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    Underlying Causes of Micro and Small Business Failures in Addis Ketema Sub City: A Case Study
    (Addis Ababa University, 2008-01) Mulugeta Endalkachew; Yitayew Abebe
    The privatization drive and the Civil and Public Service reforms that began in the early 1990s in Addis Ababa laid a foundation for an increased number of Micro and small business enterprises. By 2005, micro and small business enterprises were employing approximately 251,081 persons in Addis Ababa city administration. The entrepreneurs that set up these enterprises lacked business management skills and capital, and as such, many of them faced a number of problems. A survey was carried out to establish the causes of micro and small business failures in Addis ketema sub city as case study. The objective of the study is to identify the underlying causes of micro and small business failures in Addis Ketema sub city, by investigating the sub city’s MSEs. The main research instrument was in-depth interview with the owners of MSEs and authorities involved in the implementation, respectively. The result of the in-depth interview was triangulated with secondary data sources. It is concluded that the causes of small businesses failure are multidimensional and diverse. They include both internal and external factors. In practice, many of these are interrelated. The study established causes of micro and small businesses failure, among which are: lack of capital, lack of business plans, high taxes, luck of land and premises, and, poor market, high rent charges and wrong pricing in the study area. The study was concluded by making a number of practical suggestions against business failure
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    Financial and Operating Performance of Women Operated Micro and Small Enterprises Organized under WISE
    (Addis Ababa University, 2008-01) Aragaw Benyam; Laxmikantham P.
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    The Soundness of Financial Management and Reporting Practices in Selected Consumer Cooperatives of Addis Ababa Sub-city
    (Addis Ababa University, 2008-04) Bekele Fikru; Yitayew Abebe
    his paper analyzes the Financial Management and Reporting Practice of consumer cooperatives.It briefly reviews cooperatives structure in relation to financial management and reporting practice. The reporting format shown in this paper will be used for those cooperatives that have limited bookkeeping or accounting experience. In many cooperatives, trained accountants will take care of the financial reports. However, most management members should understand the reporting function and be able to interpret financial reports. By understanding components of financial management cooperative leaders will make prudent business decision
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    The Performance of Micro Finance Institutions in Ethiopia: A Case of Six Microfinance Institutions
    (Addis Ababa University, 2008-04) Yirsaw Alemayehu; Yitayew Abebe
    Currently micro financing is one of the most powerful tools for combating poverty primarily by providing loan to the poor section of the society. The number of micro financing institutions serving the poor in Ethiopia has grown to over 27with in short period of time .The steady growth in the sector has created a competition for scarce funding among institutions. Hence, recent years have seen a growing push to measure performance of micro financing institutions in order to be able to compete and achieve their objectives. In light of this , the paper attempted to look at the performance of MFIs by taking six institutions as a case from Profitability and Sustainability; Asset and Liability management; and Efficiency and productivity perspectives Data for the study was from secondary sources and various ratios and indicators were used to measure the performance of the MFIs .Five years data from 2002 to 2006 were used to see the trend in performance The majority of MFIs passed both operational and financial self sufficiency and fewer still requires support to survive and sustain in the industry. Most MFIs are strong performers on return on asset .in connection with liquidity, most MFIs lack strong position to effect immediate obligations. large MFIs are more efficient and productive than small and medium ones. But small MFIs seem to reach the poorest section of the society. Finally ,the trend in performance of microfinance institutions during those years of operation was encouraging
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    Internal Audit: Reporting Relationship in Ethiopian Public Enterprises
    (Addis Ababa University, 2008-06) Mulugeta Samuel; Gebrehiwot Gebremedhin
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    A Study on the Dividend Practice of Private Banks in Ethiopia
    (Addis Ababa University, 2009-06) Dagnaw, Yidersal; Gebrehiwot, Gebremedihn (Assistant professor)
    The paper examines the trend and determinant factors of dividend payment of the private banks in Ethiopia, where there is no stock market. The study uses data of the six banks for the period from 1999/00 to 2007/08. The study examines the interrelationship between dividend of the banks and some selected key determinants like earnings, debt to equity ratio and liquidity The findings provide as there is positive linear relationship between dividend per share and earnings per share, dividend per share and debt to equity ratio of the banks. Other determinants like tax considerations, ownership structure, agency problem and legal restrictions are also found to be important determinant factors on the dividend decision of the banks
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    Credit Risk Management System of Ethiopian Commercial Banks (Case of Some Public and Private Banks)
    (Addis Ababa University, 2009-06) Mekonnen, Sahlemichael; Gebrehiwot, Gebremedhin
    Banking is a business practice, or profession almost as old as the very existence of man. It has sprouted from the very primitive stone age banking, through the Victorian age to the technology driven Google- age banking, encompassing automotive teller machines (ATMs), credit and debit card, correspondent and internet banking ( Wikipedia, 2008). While financial institutions have found difficulties over the years for a multitude of reasons, the major cause of serious banking problems continues to be directly related to lax credit standards for borrowers and counterparts, poor portfolio risk management, or a lack of attention to changes in economic or other circumstances that can lead to deterioration in the credit standing of bank's counter parties. Now a days credit risk is becoming a vicinity of concern not only to bank's but to all in the business world because the risk of a trading partner not fulfilling his obligations in full on due date can seriously Jeopardize the affairs of the other partner. The goal of Credit Risk Management is to maximize banks risk- adjusted rate of return by maintaining credit risk exposure within acceptable parameters. Banks need to manage the credit risk inherent in the entire portfolio as well as the risk in individual credits or transactions. Banks should also consider the relationships between credit risk and other risks. Effective management of credit risk is a critical component of a comprehensive approach to risk management and essential to the long-term success of any banking organization (Basle committee on banking supervision, 2004) The axle of this study is to have a clearer picture of how Commercial Bank of Ethiopia, Construction & Business Bank, Dashen Bank S.C., Awash International Bank S.C., United Bank S.C. and NIB International Bank S.C manage their credit risks. In this light the study in its first chapter gives background to the study and the second part is a detailed literature review on the origin of banking, credit risk management principles, tools, techniques and assessment models. Data analysis and interpretation of results are dealt in chapter three. Finally based on these, conclusions and recommendations were drawn on the last chapter of the paper
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    Cost Efficiency and Profitability Analysis of Private Commercial Banks in Ethiopia: An Empirical Study
    (Addis Ababa University, 2009-06) Mesfin, Samson; Gebrehiwot, Gebremedin
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    Practice of Commercial Banks in Ethiopia Assessment of Liquidity Risk Management
    (Addis Ababa University, 2009-06) Melak Tirualem; Gebrehiwot Gebremedhin
    The main purpose of the study was to assess the liquidity risk management practice of commercial banks in Ethiopia. To deal with the problem, three fundamental research questions were formulated that stress on the impact of liquidity on performance of banks, the existence of standardized liquidity risk management strategy(practice) and the impact of the directives of NBE on the performance of commercial banks in Ethiopia. To conduct the study, descriptive method was employed. Purposive sampling was used in the selection of each bank and the respondents from the respective bank. Thus a total of 30 respondents participated to the sources of primary data for the study. Data were collected through questionnaire, interview and annual reports of each commercial bank. The data collected from primary and secondary sources were organized using tables and graphs ad interpretation was made on the data using quantitative and qualitative methods. The findings of the study revealed that there is no uniform (standardized) liquidity risk management policy and procedure in the banking industry which is for all commercial banks in Ethiopia. The directives issued by NBE have no significant impact that will affect the performance of commercial banks instead they are important for the normal operations of banks and the industry in general. The over all liquidity position of commercial banks is excess which is caused by low economic development and existence of limited financial instruments in the country. Liquidity position of a bank has an impact on the performance of the bank. Too much liquidity position of a bank decreases the performance of the respective bank unless the excess liquidity position is managed properly. Among the factors that influence liquidity risk management by commercial banks in Ethiopia include: absence of secondary markets, lack of enough financial instruments and absence of strong management information system. Finally, recommendations were forwarded based on the major findings so as to improve the liquidity risk management practice of commercial banks in Ethiopia
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    Assessment on the Use of Management Accounting Information for Decision Making and Management Control: A Case Study of Some Selected Manufacturing Companies in City of Addis Ababa
    (Addis Ababa University, 2009-06) Tesfaye Tewodros; Subramanian Ulaganathan
    The study examines the use of management accounting information in decision making and management control in the case of some selected manufacturing companies in the city of Addis Ababa. The objective is to identify the types of decisions that managers often make and areas which need management control and assess whether managers use management accounting information in decision making and control. It also assess whether management accounting information help managers to be effective in their decisions and control. The data used in this study was obtained through questionnaire and interview. Questionnaire was prepared and distributed to finance managers, marketing managers, production managers and accountants. Unstructured Interview is also made to collect data. The study finding shows that there is modest use of management accounting information in manufacturing companies in city of Addis Ababa and it also shows managers that use management accounting information are effective in their decision and control. Key Words: Management Accounting, Decision Making, Management Control, Accounting Information
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    A Project Work on Causes and Impacts of the Non- Performing Loans on Performance of State Banks: A Case Study of DBE
    (Addis Ababa University, 2009-06) Admasu Yonas; Gebrehiwot Gebremedhin
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    Customs Valuation System in Ethiopia
    (Addis Ababa University, 2009-06) Seifu Tenkir; Abehodie Wollela
    The study assessed the customs valuation system applied in Ethiopia and investigated the existing problems in the system. The methods adopted in the study include documentary analysis, in-depth interview and self administered questionnaires. The results suggested that the Customs Valuation System in Ethiopia does not provide fair, neutral and uniform valuation and does not effectively protect traders from risk of arbitrary valuation by the customs officers. There is also risk of revenue loss to the government due to underinvoicing of imports by the traders since controlling mechanisms such as Post Clearance Audit (PCA) are not adequately developed. Therefore, the Government of Ethiopia needs to strengthen the controlling mechanisms within the customs valuation system since duties and taxes on foreign trade contribute the significant portion of its tax and duty revenues