Table 21 shows the ranking of factors considered in

This preview shows page 13 - 15 out of 17 pages.

Table 21 shows the ranking of factors considered in production of inventory in Ethiopian manufacturing companies where “Production schedule”, “Inflation Effect”, and “Seasonality of demand” are ranked first (2.23), second (2.50) and third (2.58), respectively. While “Shortage cost” (2.85) and “other” options are ranked fourth and fifth (4.85).The analysis indicate shows that most preferred with highest ranked factor of production in manufacturing companies of Ethiopia is the production schedule. Table 22: Criteria of Evaluating Change in Inventory Policy Ranking of Criterion in Evaluating the Proposed Change in Inventory Policy Criterion N Percentage Ranking Average Ranking 1 2 3 4 Inventory level Inventory Cost Profit Return on Investment 31 34 42 53 19.0 22.9 40.0 19.0 29.5 32.4 21.0 16.2 29.5 28.6 27.6 14.3 21.9 16.2 11.4 50.5 2.54 2.38 2.10 2.96 As shown in Table 22, “profit” is ranked highest with average rank of 2.10, followed by “inventory cost” with average rank of 2.38 and then “inventory level” with average rank of 2.54. The least ranked option is “return on investment” with average rank of 2.96. The result of this study shows that the most preferred and the highest ranked criteria to be considered up on a proposed change in inventory policy is profit while return on investment as a criteria is ranked the least. Like in the case of accost receivable, working capital is not seen somehow as an on-going investment by all of the surveyed firms. Management of Short Term Financing This section presents the result and discussion of data analysis related to management of short term financing practices that include the management of accounts payable and short term borrowings. Specifically, the section presents the results of practices with respect to cash discount offered by suppliers; reason of taking discount; annualized cost of trade credit; primary use of the short term financing; possible sources of short term loan; type of loan used; collateral requirement of short term loan and degree of agreement how working capital management practice improve liquidity.
International Journal of Research in Finance and Marketing (IJRFM) Vol. 7 Issue 2, February - 2017 ISSN(o): 2231-5985 | Impact Factor: 6.397 | International Journal of Research in Finance & Marketing Email:- [email protected], An open access scholarly, peer-reviewed, interdisciplinary, monthly, and fully refereed journal 58 Table 23: Short Term Financing Management Practices Management Practices Short Term Financing Response Frequency Percent Practice with respect to cash discount offered Always take discount 19 18.1 Sometimes take discount 50 47.6 Pay latter but take discount 23 21.9 Never take discount 13 12.4 Total 105 100.0 Why of Taking Discount Stabilize good relation 11 12.0 Obtain monetary benefit 22 23.9 Both 59 64.1 Total 92 100.0 Estimated Annualized cost of trade credit 1.0 5.9% 30 28.6 6.0 -10.9% 49 46.7 11.0 - 14.9% 20 19.0 Greater than 15% 6 5.7 Total 105 100.0 Primary use of the short term financing Regular and constant part of finance 18 17.1 Cyclic part of firm financing 18 17.1 Seasonal part of firm financing 40 38.1 Non spontaneous need 29 27.6 Total 105 100.0 Regarding the practice with respect to cash discount offered, 50(47.6%) of respondents replied

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture