Determinants of Profitability: Evidence from Large Manufacturing Food and Beverage Companies of Addis Ababa
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Date
2017-06
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Addis Ababa University
Abstract
Determinants of Profitability: Evidence from Large Manufacturing food and beverage Companies
of Addis Ababa.
This study sets out to examine the determinants of food and beverages profitability specifically
focused on large manufacturing companies of the sector who submitted their annual financial
statement reportto ERCA LTO, during the period 2011-2015. Consequently,the researcher used
secondary data obtained from the financial statements (Balance sheet and Profit/Loss account) of
food and beverage companies, and financial publications of CSA, MOFED and MOT.
Quantitative research approach was adopted.The study performs a panel least square regression
analysis to examine the proposed relationship. The study had a population size of 29 food and
beveragecompanies operating in Addis Ababa. Simple random sampling technique was used to
select the sampled companies from the period of 2011-2015, consisting of 14 companies with 70
observations.The results of panel least square regression analysis showed that: Firm size,
Leverage and capital intensity, have statistically significant and negative impact on profitability.
On the other hand, Managerial efficiency has a positive and statistically significant impact on
manufacturing food and beverage companies’ profitability. The study concluded that size may
have no or negative impact on profitability, managerial efficiency has strong effect on
profitability. Beside the study suggested for the stakeholders that give more attention on the major
variables of the sectors such as firm size and capital intensity. While the results may not be
generalizable to all food and beverage manufacturing companies found in the country, the
findings should provide food and beverage executives and managers with valuable information for
developing their strategies with regard to firm specific determinants.
Key Words: - ROA, Firm specific factors, Inflation
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Keywords
ROA, Firm specific factors, Inflation