Determinants of Profitability in the Manufacturing Firm: The Case of Natural Mineral Waters Producing Companies
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Date
2019-01
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Addis Ababa University
Abstract
The main purpose of this study is to examine the determinants of profitability in the
manufacturing of natural mineral waters companies focused on manufacturing companies of
the sector who submitted their annual financial statement report from ERCA, LTO, during the
period from 2013 to 2017. Accordingly, the researcher used secondary data obtained from the
financial statements (Balance sheet, profit/Loss statement.) of manufacturing of natural
mineral waters producing companies, and financial publication of CSA, MOFED and MOT. In
this study the researcher approach was adopted quantitative research. Least square method
regression analysis performs made to examine the proposed relationship. The result of least
square regression analysis showed that: Firm size, Leverage and capital intensity,
Management efficiency, liquidity, Firm Growth, Inflation and Interest rate. The study had a
population of 35 manufacturing of bottled mineral water companies in Addis Ababa and its
area. The technique used for this study is simple random sampling method from the period
2013 to 2017 consists of 17 companies with 85 observation. The results of panel least square
regression analysis showed that liquidity , interest rate , managerial efficiency , firm growth
and capital intensity have significant impact on profitability whereas firm size , leverage
,inflation rate have statistically insignificant effect on profitability of producing bottled
natural mineral water companies .This study conclude that managerial efficiency may have no
or negative impact on profitability and the study strongly suggested that the stakeholders
should have to give strong attention on the major variables of the sector like capital intensity
firm growth and firm size. The findings should provide manufacturing mineral water
companies` managers and CEO with valuable information for developing their strategies with
regard to firm specific determinants.
Description
A thesis submitted to the department of Accounting and Finance College of business and economics for the partial fulfillment of degree of Master of Science in accounting and finance
Keywords
Inflation rate, Managerial efficiency, ROA