The research was conducted to examine capital budgeting appraisal technique practice and its impact on financial performance of manufacturing companies in Ethiopia. The researchers were used a mixed research approach. Cross sectional data were gathered from employees of thirty manufacturing companies found in Ethiopia. The questionnaires were distributed to 264 respondents. To analyze the collected data the researchers were used both descriptive statistics and regression model. The findings of the study confirmed that, Ethiopian manufacturing companies were actively engaged in the expansion of existing products. However, significant percentages of companies less frequently invest their funds in the development of new products. Majority manufacturing companies were regularly used net present value and payback period capital budgeting appraisal techniques to select the profitable investment opportunities. As regression result indicated, net present value and profitability index had positive and statistically significant impact on return on assets of Ethiopian manufacturing companies. However, internal rate of return and payback period had negative and statistically significant impact on return on assets of manufacturing companies in Ethiopia. Finally, the researchers suggested that, Ethiopian manufacturing companies should implement sophisticated capital investment appraisal techniques instead of using non-discounted techniques.