Junior Research Symposia
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Item The Relationship between Working Capital Management and Corporate Profitability: Comparison between Manufacturing and Pharmaceutical Chemical companies in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Kavishan, D.; Abeywardhana, D.K.Y.The objective of this research is to provide empirical evidence on the Relationship between Working Capital Management (WCM) and Corporate Profitability of Manufacturing and Pharmaceutical and Chemical companies in Sri Lanka. The Regression analysis is used as analytical techniques and the sample data collected for the period of Six years from 2010-2016 for 10 manufacturing companies and for 10 pharmaceutical and chemical companies listed in Colombo Stock Exchange (CSE). This study measures corporate profitability using Return on Assets (ROA) and independent variables are Inventory Turnover period (ITP), Average Collection Period (ACP) and Average Payable Period (APP) and control variables are firm size, debt ratio and sales growth. For pharmaceutical and chemical sector ITP and total assets shows significantly positive relationship with profitability and ACP, and APP is significantly negative with profitability. In contrast, for the manufacturing sector, ACP shows significantly negative relationship with profitability. This study suggests that Pharmaceutical and Chemical sector should focus on reducing the ACP and APP to increase the profitability thereby maximize the wealth of shareholders of the company. The firms in manufacturing sector should reduce the ACP to increase their profitability.Item Impact of Working Capital Management on Firm Performance: Comparative Analysis between Listed Manufacturing & Plantation Companies in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Shanka, G.K.C.N.; Abeywardhana, D.K.Y.This study examines the relationship between the Working Capital Management (WCM) and the firms’ performance. This research uses data from 2010 to 2016 and examine two sectors (manufacturing and plantations) listed in Colombo Stock Exchange (CSE). Ordinary least squares regression and fixed effect model have been used to estimate the relationship between variables. The results showed that different sector may give different results in determining the relationship between the working capital and the firms’ performance. The study finds a negative relationship between profitability and number of day’s receivable in both manufacturing and plantation sectors. And negative relationship between number of day’s inventory holding of manufacturing firms, but positive relationship between profitability and no of day’s inventory holding in plantation sector firms, but a positive relationship between profitability and number of days accounts payable settlement in manufacturing companies. However Plantation Company’s result shows negative relationship between No of days payables settlements with profitability. The present study reveals that shortening of the cash conversion cycle negatively affects the profitability of Sir Lankan manufacturing companies but negatively affect the profitability of Sri Lankan plantation companies. Current ratio used as a variable shows positive relationship with profitability of plantation companies and negative relationship with the profitability of the manufacturing companies in Sri Lanka. Results can be strengthened if the firms manage their working capital in more efficient way it will ultimately increase profitability of these companies.