Determinants of Ethiopian Green Coffee Estate Share Companies Profitability: Considering the Financial Aspects Green Coffee Estate Share Companies Profitabilitbility determinants in Ethiopia

Abstract

The aim of the study was to analyze the determinants of Ethiopian Green Coffee Estate Share Company’s profitability considering the biggest Green Coffee Estate Share Company in Tepi. The study adopted financial ratio analysis to assess the financial performance of the company. This study adopted a quantitative method to examine the relationship between the financial performance indicators and the actual performance which was measured by return on assets (ROA) and return on equity (ROE). The study used correlation and multiple linear regression analysis over a period of nine years. Leverage has a positive and insignificant effect on financial performance measured by return on asset and return on equity which leads to an increase in the asset’s utilization potentials of the company and liquidity and company size were negatively correlated with firm performance, indicating that a higher value of liquidity invariably influences a firm’s financial position. The company is advised to analyze the financial health of the company by performing a ratio analysis. A ratio analysis covers profitability, leverage, and liquidity ratios. Each category addresses different aspects of the financial structure of a company which together account for its overall financial health. Greater attention should be paid to leverage, liquidity, growth opportunity, and size of the company