4th SRS - DFIN 2015

Permanent URI for this collectionhttp://repository.kln.ac.lk/handle/123456789/12120

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Subject: search.filters.subject.Capital Structure

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    Capital Structure and Its Impact on Profitability: With Special Reference to Listed Manufacturing and Service Companies in Sri Lanka
    (Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Weerathunge, S.I.
    This study investigates the relationship between capital structure and profitability of listed manufacturing and service sector companies in Sri Lanka. The study covers six years period from 2009 to 2014 and the sample size is five companies from service sector and twenty companies from manufacturing sector. The study uses return on assets (ROA) and return on equity (ROE) as performance variables. In addition debt equity ratio (DER) and debt assets ratio (DAR) are used as capital structure variables. The relationship between the performance and capital structure variables are analyzed using correlation coefficient and regression techniques. According to the results of this comparative study the relationship between capital structure and return on assets is not significant across all the observations carried out for both manufacturing and service sector except one observation in manufacturing sector. It also shows an insignificant relationship between profitability between debt assets ratio. However, there is a significant relationship in all observations between return on equity and debt to equity in both manufacturing and service sector. Moreover the study reveals that the nature of the industry also determines the effect of capital structure on their profitability. In manufacturing firms, there is a negative significant relationship between return on equity and debt equity ratio while service sector reveals a positive significant relationship between return on equity and debt equity ratio.
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    Effect of Capital Structure on Stock Price: Evidence from Manufacturing Sector in Sri Lanka
    (Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Jayarathna, A.M.S.S.
    Objective of this study is to identifying effect of capital structure on stock price of manufacturing sector in Sri Lanka. This study based on the typical analysis of the impact of capital structure on stock price. Based on literature, debt to equity ratio, interest coverage ratio, debt to total asset ratio used as independent variables and stock price used as a dependent variable. Secondary data were collected from annual reports. As the final result of the research, expects to appear at model which may help to determine the impact of capital structure on stock price. Expected outcome of the multiple regression models, hypothesis testing, and correlation analysis analyzed by using SPSS. In conclusion, summed up the work observed findings there were debt to equity ratio and interest coverage ratio significantly impact to the stock price as negatively and positively respectively while debt to total asset ratio was not significant. Finally, this research derived the prospects for the further study of the problem and recommendations for the possible use of the results in practice.