Junior Research Symposia
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Item Effect of Leverage on Firm Growth: With Special Reference to Food, Beverage and Tobacco Companies Listed in Colombo Stock Exchange(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, 2020) Aberathna, H.P.D.C.N.; Abeywardhana, D.K.Y.This study investigates the effect of leverage on firm growth with special reference to the food, beverage and tobacco companies listed in Colombo Stock Exchange. The relationship between leverage and firm growth in food, beverage and tobacco industry in developing countries have not adequately addressed in the previous literatures and there is a debate in findings of previous researches about the relationship between leverage and firm growth. The main problem of this study is to investigate whether the leverage influences negatively or positively on signaling the firms’ growth. This study uses secondary data from annual reports of every selected company for 5 years. The sample comprises 20 firms from 2015-2019. This study will use a panel regression model to examine the relationship between variables. Overall leverage, long-term leverage and short term leverage are used as independent variables and Revenue Growth rate is used as the dependent variable. In addition, firm size and Asset Tangibility use as control variables in the econometric model. According to the results of this study managers can optimize firm revenue and firm growth by changing financial leverage. The findings of this study will help to managers and further researchers to get an idea about the effect of the leverage on firm growth.Item The Impact of Income Diversification on Risk and Return of Financial Sector in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, 2020) Piyumika, B.A.; Abeywardhana, D.K.Y.Financial sector in developing countries have not had diversification opportunities as financial sector in developed economies. Income source diversification is an important phenomenon which shifts financial sectors from its traditional or loan based activities to non-traditional activities. This study examines the impact of income diversification on risk and return of financial sector in Sri Lanka. Findings of the study will provide information about the relationship among income diversification, risk and return and effect of income diversification to the risk and return. For the purpose of study, Independent variables are Net Interest Income (INT) and Revenue Diversification (HHI). Control Variables of the study are Size (SIZE), Capitalization ratio (ETA) and Assets Growth (GTA). Dependent variables are Return and Risk. Return is measured using RoA and Risk is measured using Z-Score. This study use secondary data from Colombo Stock Exchange and have selected 40 listed companies for 10 years from from 2010 to 2019. The findings of the study will provide information to executives of financial institutions, investor who assessing best bank to invest and to regulatory agencies.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 Working Capital Management and Its Impact on Profitability: A Study of Selected Listed Hotels and Travels Companies in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Priyadarshani, M.R.; Abeywardhana, D.K.Y.The management of working capital can be defined as an accounting approach that emphasize on maintaining proper levels of both current assets and current liabilities. The management of working capital relates managing inventories, accounts receivable, accounts payable and cash. Working Capital Management (WCM) is a powerful element in any organization. For the reason behind that, the main working capital components such as Average Collection Period (ACP), Average Payable Period (APP), Inventory Conversion Period (ICP) and Cash Conversion Cycle (CCC) are directly impact to the firm’s performance. Consequently in this study also used these variables as the independent variables. Return on Assets (ROA) is used as a measure of profitability as well as dependent variable. Current Ratio (CR), Debt Ratio (DR), Firm Size (SIZE) and Sales Growth (GROWTH) are the control variables that used in present study to compute the WCM impact on profitability. This paper analyzes the WCM and its impact on profitability in Sri Lanka for the period of 2011 to 2015. The population consists with 38 hotel and travel companies listed in Sri Lankan Colombo Stock Exchange and the sample contains 20 companies of the above mentioned population. Pearson’s correlations and ordinary least square regression method were used to establish the relationship between WCM and firm’s profitability. This study finds that positive relationship between return on assets and ICP, CCC and CR. On the other hand present study suggests that there is a negative relationship between ROA and ACP, APP, DR, SIZE and GROWTH of firms. Among these variables, ICP and SIZE are highly significant to the profitability. Based on the key findings from this study it has been evident that managers can create a value for the enhancement of shareholder’s wealth by increasing the number of days inventory conversion to a maximum level and reducing the number of days accounts receivables and accounts payables to a reasonable level. This study recommend to the management in setting longer credit period policy for this sector to achieve higher profitability and they can maintain optimum high level of inventory in order to reduce the cost of possible breaks in the production process and loss of business due to the scarcity of inputs in production. Furthermore, firms can take short to pay their creditors in as much as they can build up strong relationships with these creditors. Also firm can get the sustainable competitive advantage by the effective and efficient utilization of the firm resources through the increment of the cash conversion cycle to its maximum. In so doing, the profitability of the firms is expected to increase.Item Working Capital Management and Profitability: Comparative Study between Manufacturing Companies and Hotels Listed in Colombo Stock Exchange of Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Patabendige, A.P.D.M.; Abeywardhana, D.K.Y.Working capital is a company’s surplus of current assets over current liabilities, and it measures the extent to which it can finance any increase in turnover from other fund sources (Hill, 2013). Working capital management is relating to maintain a balance between current assets and current liabilities. It ensures the proper liquidity position of the company in order to settle the short term obligations and operating expenses. This study examines whether there is any impact of working capital management on profitability for the selected manufacturing companies and hotels listed on Colombo Stock Exchange (CSE) in Sri Lanka. Profitability measures by using Return on Asset (ROA) and working capital management measures by using Inventory Control Period (ICP), Average Collection Period (ACP), Average Payment Period (APP) and Cash Conversion Cycle (CCC). And also debt ratio, credit ratio and firm size used as control variables. Data collected from the annual reports of selected companies for 5 year period from 2010 to 2014. Data analyzed by using both correlation analysis and panel data regression models. This study compared the manufacturing sector and hotel & travel sector based on the result of the analysis. Based on the findings of this study, ACP has significant impact on profitability for the selected manufacturing firms. That means if a firm spend more time for collect money from its customers, then companies can increase their profits. For the hotel sector, ACP and APP have negative relationship with the Return on Asset and ICP has positive relationship with the ROA. This study suggests that manufacturing companies in Sri Lanka can maximize their profit by increasing the average collection period.Item Comparison between Economic Value Added (EVA) and Accounting Measurements in Predicting Stock Return in Listed Manufacturing Companies in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Nishadi, W.W.D.M.; Abeywardhana, D.K.Y.The objective of this research is identifying the best measurement and provides suggestions to predict the stock return in Sri Lanka considering the listed manufacturing companies of Colombo stock exchange. Economic value added (EVA), Net Profit (NP), and Net Operational Profit after Tax (NOPAT) is independent variables, and stock return is dependent variable in this study. Data collected from using annual reports of 20 manufacturing companies for the period of 2010 to 2016. The findings show that there is a positive relationship between the stock return and all the independent variables. NOPAT is the most important measure in predicting the stock return. Further this study suggested that random effect model should be accepted and then it explain that differences among entities have some influence on the dependent variable. Accounting measures are better in predicting stock return than EVA.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.Item The Impact of Working Capital Management on Profitability of Sri Lankan Manufacturing Companies(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Dharmasena, N.W.G.N.P.; Abeywardhana, D.K.Y.This study investigates the impact of the Working Capital Management on profitability of Sri Lankan manufacturing companies. To achieve the objectives of the study, the researcher used secondary sources of data for a sample of 20 manufacturing companies using panel data analysis for the period of 2011-2015. The dependent variable Return on Assets (ROA) is used as a measure of profitability. The key independent variables used in the analysis are the Inventory Conversion Period (ICP), Average Collection Period (ACP), Average Payment Period (APP) and Cash Conversion Cycle (CCC). In this study pooled Ordinary Least Squares (OLS) method regression used for analysis. The impact of WCM on firm’s profitability is modeled using OLS regression equation to obtain the estimates. The results show that there is a positive relationship between ACP and profitability as well as APP and Profitability of Sri Lankan manufacturing companies. Therefore it implies that increase the number of days of accounts receivable, leads to increase profitability. Further this suggests that account receivable management is the significant factor in predicting profitability of the manufacturing sector companies in Sri Lanka. As a conclusion we can say that APP is the best measurement in determining profitability of manufacturing companies in Sri Lanka.