Commerce and Management

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Author: search.filters.author.Thilakarathne, P.M.C.Subject: search.filters.subject.Profitability

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    Impact of Working Capital Management on Profitability of Manufacturing Sector Small and Medium Sized Enterprises (SMEs) in Sri Lanka
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Bandara, A.W.D.Y.; Thilakarathne, P.M.C.
    Working Capital Management (WCM) is the management of short-term financing requirements of companies. WCM impacts on both profitability and liquidity of the companies. This study aims to investigate the impact of working capital management on profitability of manufacturing sector small and medium sized enterprises in Sri Lanka. This study makes use of twenty manufacturing sector small and medium enterprises in Sri Lanka for the period from 2010 to 2015. Study used secondary data, data were collected from selected companies audited financial statements of relevant years. Multiple regression model was used to investigate the relationship between working capital management and companies’ profitability. The working capital was measured by cash conversion cycle (CCC), average number of day-sales of inventories (INV), average number of day-sales accounts receivable (AR) and average number of accounts payable (AP) as independent variables and the profitability was determined by return on assets (ROA) as dependent variable. Finally, researcher finds that the positive relationship between CCC and AP with ROA and AR is negatively related with ROA. So, the CCC, AR and AP are significant factors to determine the impact profitability of manufacturing small and medium sized enterprises in Sri Lanka. The INV is not a significant factor. Therefore, INV does not impact on profitability of manufacturing small and medium sized enterprises in Sri Lanka.
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    The Impact of Working Capital Management on Profitability in Listed Manufacturing Companies in Sri Lanka
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Bandara, A.B.M.M.H.; Thilakarathne, P.M.C.
    Working Capital Management has its influence on liquidity as same the profitability. Several studies (Deloof, M., 2003., Raheman A and M Nasr, 2007.),given emphasizing the importance of the short-term finance in firms. The purpose of this research is investigates the impact of working capital management on profitability of manufacturing companies in Sri Lank? The trend in working capital needs and its implication to profitability of firms are examined to identify the causes for any significant differences desirable among the industries. Hence the present study was used regression analysis to examine the hypotheses frame worked for the period of seven years from 2010-2016 with the total 182 observations and data collected from annual financial statements. Working capital management were measured using inventory period, trade receivable, trade payable, cash conversion cycle and current ratio. Return on assets applied to measures of profitability Found of this study showed a positive significant relationship between inventory turnover period, trade receivable period, and significant negative relationship with ROA. These findings of the study can be used cash conversion cycle enhancing it will lead to reducing profitability of the firm, and managers supports to create a positive value for the shareholders by reducing the cash conversion cycle to a possible minimum level. The study also finds a significant negative relationship between accounts payable and profitability which is consistent with the view that less profitable firms delay long time to pay their bills.
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    The Impact of Credit Risk Management on the Performance of Banking Sector
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Abewardhana, N.A.K.M.A.; Thilakarathne, P.M.C.
    The aim of this study was to analyze the impact of credit risk management on the performance of banking sector in Sri Lanka and to establish if there exists any relationship between the credit risk management and performance of commercial banks in Sri Lanka. A causal research design was undertaken in this study and this was facilitated by the use of secondary data which was obtained from the Bank’s Annual reports. The study used regression analysis to analysis the data and findings have been presented in the form of tables and regression equations. The study found that there is a significant relationship between the credit risk management and performance of the banking sector. Further the study investigated that non-performing loans have positive relationship with financial performance (ROA). The analysis found that NPL and ROE have negative relationship through regression analysis that mean a unit increase in NPL, decrease ROE by 1.4. CAR and ROE have negative relationship, it can be described coefficient value is -.526. This study concludes that the credit risk management and financial performance (ROA, ROE) have significant negative relationship. The study recommends that commercial banks should try to keep their nonperforming loan at optimal level because nonperforming loan has negative relationship with profitability. Managers get higher evaluation regarding customer have ability to pay back when borrowing. This analysis suggests these banks to establish credit risk management unit for implementing best risk management practices.