Determinants of Profitability of National Tobacco Enterprise (Ethiopia) Share Company
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Date
2017-06
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Addis Ababa University
Abstract
The study of factors determining the profitability of companies has been given special attention over time in the fields of business research. In this study, a time series data set of National Tobacco Enterprise (Ethiopia) S.C was used for examining the determinants of the Company’s profitability employing Ordinary Least Square (OLS) method. For this purpose financial information covering years 1968 – 2015 were collected and analyzed. Return on asset, considered as a measure for profitability, is the dependent variable while firm size, sales growth, expense to revenue ratio, gross margin return on inventory, sales to current asset ratio, and inventory holding period are considered as independent variables. According to the findings, firm size and expense revenue ratio showed statistically significant negative effect on profitability. Whereas, sales growth, gross margin return on inventory and sales to current asset ratios have significant positive effect on profitability. Inventory holding period, however, has positive but insignificant effect on profitability.
Key words: Profitability, profitability Determinants, time series data, manufacturing companies
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Keywords
Profitability, profitability Determinants, time series data, manufacturing companies