Abebaw, Kassie (PhD)Gebrie, Worku2018-11-012023-11-042018-11-012023-11-042018-06http://etd.aau.edu.et/handle/123456789/13568A Thesis submitted to The Department of Accounting and Finance College of Business and Economics presented in partial fulfillment of the requirement for the degree of Master of Science in Accounting and FinanceIt is well established that SMEs development can create huge employment opportunities and enhance to reduce poverty and improves the living standards of society as well as overall country’s economy. This study was designed to assess the factors that affect the profitability and growth of Small and Medium Enterprises (SMEs) in Woreta town, South Gondar as a case study. The study used explanatory research design to determine the effect of firm’s size, liquidity, efficiency, asset management and leverage to the profitability of SMEs by selecting a sample of 12 SMEs those engaged business activities in Woreta town South Gondar for the last 5 year was taken for the study by using purposive sampling technique. The study used the regression model and collect data from Twelve (12) SMEs covering the period of Five (5) consecutive years, 2013-2017 with a total of 60 observations. To this end, the study employed a quantitative research approach by using financial statement (both statement of profit and loss and statement of financial position) that reported to revenue office. The study used panel data and E-view 8 software. The study used one dependent variable return on asset (ROA) and six independent variables; firm’s size, current ratio, cost income ratio, fixed asset turnover ratio and debt ratio. The findings of regression result revealed that explanatory variables firm’s Size and Cost Income Ratio had a negative significant effect on profitability and growth of SMEs but Current ratio and Debt Ratio had a negative insignificant effect on profitability and growth of SMEs whereas Fixed Asset Turnover Ratio had positive significant effect on performance of profitability of SMEs in Woreta town. Finally, the study recommended that SMEs supervisors, owners, government bodies and future researchers should be given more attention to these variables to reducing the weaknesses of SMEs resource utilization by improving economies of scale.en-USProfitabilityROA and SMEsTechnical Report