Analysis of Financial Distress and its Determinants in Selected SMEs in Wolaita Zone

Ephrem G. Selassie

Analysis of Financial Distress and its Determinants in Selected SMEs in Wolaita Zone

Ephrem G. Selassie * §

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§ Wolaita Sodo University

Analysis of Financial Distress and its Determinants in Selected SMEs in Wolaita Zone

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Abstract

The development of SMEs is considered as one of vital determinants of the growth of Ethiopian economy, and for secure equitable distribution of the benefits of the economic growth. However, SMEs in the country are leveled as not performing well and falling short of yielding the much anticipated contribution for the growth of the economy as they are expected. This study is conducted to analyze financial distress level of SMEs in Wolaita Zone and indentify those factors affecting their financial health. In this study 30 firms form three sectors are selected as samples selecting ten samples from each of manufacturing, service and trade sector using purposive sampling method. Accordingly, the results of Altman’s Zeta Score Model analysis indicate that three of the ten selected firms in the service sectors are found to be financially distressed, but none of the sampled SMEs in the sector are below the bankruptcy point. In manufacturing sector, one of the ten selected SMEs is found with the Zeta score of below the bankruptcy line and all of the rest of the sampled SMEs are found to be under financial distress though their Zeta score is above the bankruptcy point.

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

How to Cite This Article

Ephrem G. Selassie. 2016. "Analysis of Financial Distress and its Determinants in Selected SMEs in Wolaita Zone". Global Journal of Management and Business Research - C: Finance GJMBR-C Volume 16 (GJMBR Volume 16 Issue C8).

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GJMBR Volume 16 Issue C8

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Journal Specifications

Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

Keywords

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Classification

GJMBR-C Classification FOR Code: G00

Submission ReceivedDecember 8, 2015
Peer Review Double Blind
Handling Editor
Accepted January 5, 2016
Published January 15, 2016

Version of record

v1.2

Issue date

December 10, 2016

Language

English

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Article Matrices

Total Score: 120

Country: Ethiopia

Subject: Global Journal of Management and Business Research

Authors: Ephrem G. Selassie, Ganfure Tarekegn, Andualem Ufo (PhD/Dr. count: 0)

View Count (all-time): 295

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Publish Date: 2016 01, Fri

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