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Financial system is a blood tissue to the proper functioning of the economy at large and the most important focus of the financial sector is gaining an excellent competitive advantage & better financial performance. However, Ethiopian commercial banks face plenty of challenges. Therefore, investigating the effect of competitive advantage on financial performance has gained importance in marketing literature. The main objective of this study is to examine the effects of competitive advantage on the financial performance of commercial banks in Ethiopia. The main contribution of this study is to bridge some irregularities by giving light on the effect of competitive advantage measurements (i.e. number of branches, bank size, total capital, customer base, management efficiency & board size,) on the financial performance of commercial banks in Ethiopia. The quantitative research approach & Explanatory research design are used to measure the effects of competitive advantage tools on the financial performance of commercial banks in Ethiopia which is measured by ROA & ROE.