Determinants of Financial Distress in the Ethiopian Manufacturing Sector: the Case of Selected Food and Beverage Firms
| dc.contributor.advisor | Habtamu Brhanu (PhD) | |
| dc.contributor.author | Shimels Dagne | |
| dc.date.accessioned | 2023-12-08T07:58:27Z | |
| dc.date.available | 2023-12-08T07:58:27Z | |
| dc.date.issued | 2023-06-05 | |
| dc.description.abstract | Financial distress is one of the most significant threats to many firms globally despite their size and nature. The term financial distress is used to describe the financial situation of a firm confronted with the arduousness that ensues in settling financial obligations on schedule, and to the full extent. The main causes of corporate failure (financial distress) are the firms’ inability to create value like inefficient use of the asset portfolio as a result of poor operational efficiency firms increase their financial leverage and insufficient liquidity, the increment of firms fixed costs, poor corporate governance measures, competition within the industry, technological change, illiquidity of assets and revenue sensitivity to economic situations like recession. The main objective of the study was to investigate empirically financial distress determinants in the case of selected food and beverage manufacturing firms (large taxpayers) in Ethiopia. 11 firms included in the sample that had at least twelve years annual report Document review was used for collecting data from 2011 to 2022 annual reports. To achieve the stated objectives quantitative approaches and explanatory research design was employed. The study used longterm debt to total equity and short-term debt to total equity as dependent variables of financial distress measure, and firm age, efficiency, profitability, liquidity, firm size, solvency, firm growth, GDP and Inflation as independent variables. For data analysis, the study used a panel data model with its random effect estimates. The result of random effect regression revealed that profitability, liquidity, solvency, and GDP have a negative and significant relationship with financial distress. In contrast, efficiency has a positive and significant relationship with financial distress. Firm size, firm age, firm growth, and inflation have a negative and insignificant relationship with financial distress. Large tax payer’s food and beverage manufacturing companies, corporate managers, investors, and lender are recommended to give attention for the profitability, liquidity, solvability, efficiency, and the general economic condition via GDP than the firm’s age, size, growth, and inflation is a wise decision before they make decisions. Finally, it’s better for the Government to intervene and support their operation to make them financially viable. | |
| dc.identifier.uri | http://etd.aau.edu.et/handle/123456789/402 | |
| dc.language.iso | en | |
| dc.publisher | A.A.U | |
| dc.title | Determinants of Financial Distress in the Ethiopian Manufacturing Sector: the Case of Selected Food and Beverage Firms | |
| dc.type | Thesis |