Does the Working Capital Requirement Vary Across Different Industrial Manufacturing Companies in Ethiopia?

Abstract

The purpose of this paper was to investigate whether the working capital requirement vary across the manufacturing companies of different industrial sub sectors in Ethiopia. The study used four years data from 2011 to 2014 on a sample of 85 manufacturing companies in Ethiopia that were selected using stratified random sampling. Univariate analysis of descriptive statistics and Analysis of Variance (ANOVA) was employed as method of data analysis and then results were presented using tables followed by brief description to interpret the result. The result of the study manufacturing companies in Wood and Wood Product Industry (WWPI)  exhibit the highest working capital requirements, while Non-Metallic Mineral Product Industry (NMPI) have lowest working capital requirements. The result of one way ANOVA showed that there exists significant difference in working capital requirements of the different industrial sector of manufacturing companies of Ethiopia. Based on the result of the study, the researcher recommended that the design and implementation of working capital policy shall consider the sub industrial sector in which the manufacturing companies operate.

Keywords: Industrial Sub Sector, Manufacturing Companies, Analysis of Variance, Working Capital Requirements