Soil erosion and sediment transport are quite complex processes as they depend on physical, biological, mechanical, and chemical processes within a particular catchment. Therefore, it is highly essential to better explain engaged physical processes and means of accounting for site-specific conditions, for soil loss and sediment yield estimation. This paper mainly focuses on physical explanations behind soil erosion and common soil erosion models like Universal or Revised Universal Soil Loss Equation(USLE/RUSLE) and Modified Universal Soil Loss Equation(MUSLE). Based on the physical explanations and overall limitations, the MUSLE is selected for the application of sediment yield estimation. The main objective of this paper is to estimate the best exponent of the MUSLE, and to estimate the best combination of the exponent and topographic factor of the MUSLE under hydro-climatic conditions of Ethiopia. For the sake of calibration procedure, the main parameters of the MUSLE which directly affect soil erosion process such as cover, conservation practice, soil erodibility, and topographic factors are estimated based on the past experiences from literature and comparative approaches, whereas the other parameters which do not directly affect the erosion process or which have no any physical meaning (i.e coefficient a and exponent b) are estimated through calibration. It is verified that the best exponent of the MUSLE is 1 irrespective of the topographic factor, which results in the maximum performance of the MUSLE (i.e approximately 100\%). For the best combination of the exponent and topographic factor, the performance of the MUSLE is greater than or equal to 80\% for all four watersheds under our consideration, we expect the same for other watersheds of Ethiopia.