Determinants of Financial Performance: In Case of Ethio Telecom

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Addis Ababa University


This study aims to investigate determinants of financial performance of ethio telecom using a time serious data for the period 1993-2015. A secondary data from the audited financial statements of ethio telecom and world bank reports used and a quantitative and explanatory research approach used. Under this study, both internal and external macroeconomic factors considered. The internal factors are revenue growth, capital structure, fixed asset utilization, liquidity, operation expense and interest expense whereas, the external factor are foreign exchange rate fluctuation, inflation and GDP per capital income. ROA used to measure the financial performance as a proxy of financial performance. On this study co-integration test and a unit root test conducted to know whether the variables are stationary or not and also to detect long run relationship between variables in order to avoid spurious regression problems since time series data to be deployed. A Full-Modified OLS (FMOLS) regression model used to regress the data by the help of E-Views 8 (econometric software). The result reveled that revenue growth positively and significantly affects the financial performance of ethio telecom, on the other hand liquidity, inflation, interest expense, fixed asset utilization and interest expense fluctuation significantly and negatively affects the financial performance of ethio telecom.


A Thesis Submitted for the Partial Fulfillment of the Requirements for the Degree of Master of Science in Accounting and Finance


Ethio telecom, Financial performance, Internal and external factors