Junior Research Symposia
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Item The Relationship between Capital Structure and Performance; Evidence from Selected Sri Lankan Hotels Listed in Colombo Stock Exchange(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Dulaji, D.W.R.K.; Jayamaha, A.The performance of hotel industry is most important to the wealthy of the Sri Lankan economy. Hotels compete in a global economy with infinite opportunities. Hence, hotels need more financial strength in order to run the day to day operations of the business. Capital Structure is one of the main criteria which concerned in financial strength of the hotels. The capital structure of listed companies is most important dimension that every stakeholder is very much concerned. The objective of this study is to identify the relationship between capital structure and performance in the listed hotels in Sri Lanka. Furthermore, this study also aims to indicate what is the most influential factor for capital structure? Short term debt, Long term debt and debt to equity ratio are used as measurement of capital structure. Performance of hotel was dependent variable and it measured by ROA. The study has been used panel data procedure for a sample of 26Sri Lankan hotels listed in Colombo Stock Exchange during 2010-2015.The data for all the variables in the study were abstracted from audited annual reportsThis quantitative analysis used descriptive statistic, regression analysis and correlation analysis to demonstrate relationship between capital structure and performance. This study found that a significant positive relationship between capital structure and performance of hotels listed in CSE. Based on findings, it can be arrived to an overall conclusion that an appropriate mix of capital structure improves the performance of hotels.Item 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.Item 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.Item Capital structure and performance of Sri Lankan listed companies(Department of Accountancy, University of Kelaniya, 2015) Rajapaksha, R.M.P.W.M.Capital structure refers to the percentage of capital (money) at work in a business. There are two forms of capital: equity capital and debt capital. Each has its own benefits and drawbacks. Equity Capital refers to money owned by the shareholders (owners). Typically, equity capital consists of two types contributed capital, which is the money that was originally invested in the business in exchange for shares of stock and retained earnings, which represents profits from past years that have been kept by the company. The debt capital in a company's capital structure refers to borrowed money that is at work in the business. Debt capital mainly we can categorise as Short term debt and long term debt. The firm’s ability of fulfil the needs of its stakeholders is tightly related to the firm’s financing decisions. Capital or Financial Structure decision is to find out the best mix of debts and equity that a company uses to finance its business. (Damodaran 2001) This research seeks to assess the Capital Structure and performance of the listed business companies in Sri Lanka to identify impact between the Capital Structure and Companies Performance. The analysis done using the annual financial statements of 20 business companies listed on the Colombo Stock Exchange which covers a period of five (5) years from 2009-2014. Correlation and regression analysis applied on performance indicators such as Return on Asset (ROA) and Profit Margin (PM) as well as Short-term debt to Total assets (STDTA), Long term debt to Total assets (LTDTA) and Total debt to Equity (TDE) as capital structure variables. The expected result of this study is find out the wether there is any significant impact between capital structure and performance of the firm’s and to recommend that companies should use more of equity or debt in financing their business activities to enhance the performance of the Sri Lankan Listed Companies.Item The effect of capital structure on profitability in Sri Lankan company(Department of Accountancy, University of Kelaniya, 2015) Madhubhashani, M.A.C.D.The capital structure decision is essential for any business organization. To understand how companies finance their operations, it is necessary to examine the determinants of their financing or capital structure decisions. Weston and Bringham (1978) define capital structure as the permanent financing of the firm represented by long-term debt plus preferred stock and net worth. Capital structure decision is the vital one since the profitability of an enterprise is directly affected by such decision. The successful selection and use of capital is one of the key elements of the firms’ financial strategy (Velnampy & Aloy Niresh, 2012). This paper seeks to investigate the relationship between capital structure and profitability of listed companies on the Colombo Stock Exchange (CSE) during a five-year period. In order to meet the objectives of the study, data will collect from secondary sources mainly from financial report of the selected companies and regression analysis is used as the methodology in this paper. Variables used for the analysis include profitability and leverage, equity ratios. Profitability measured by Return on Assets (ROA). Expected outcome of this paper is to develop a theory relating to the capital structure and profitability based on the Sri Lankan Context.Item Effect of capital structure on company performance in Sri Lanka(Department of Accountancy, University of Kelaniya, 2015) Abeyrathne, A.H.M.U.S.The objective of all financing decisions is wealth maximization and the immediate way of measuring the quality of any financing decision is to examine the effect of such a decision on the company’s performance. Capital structure is a financial tool that helps to determine ‘how do firms choose their capital structure?’ a firms capital structure is then the composition or structure of its liabilities. Therefore managers need to take decision very carefully regarding to the capital structure of company. Capital structure is defined as the relation between the debt and equity that is used to finance firm’s assets (Moyer 2001, McMenamin 1999). The choice of a capital structure of a firm can equally be viewed from the management and the ownership structure of the company (Du and Dai, 2002). Pindado and Torre (2004) posit that the capital structure of a firm is determined by the incentives and goals of those who are in control of the firm. Capital structure decision is the mix of debt and equity that a company uses to finance its business (Damodaran, 2001). The objective of this research is that investigates how the capital structure affects the company’s performance. The research is focusing on Impact of capital structure listed companies in Colombo Stock Exchange Market according to the variable and the study base on secondary data. The data are collected from published annual reports on individual companies, Colombo Stock Exchange books, Colombo Stock Exchange journals and magazines. The sample for this study is taken from 10 firms. The sample period is 10 years ranging between 2005 and 2015 and it is ensured that each of the firms has data for at least five years during this period under study. The method of data analysis use in this research work is the descriptive, correlation and regression technique. The data is on the key variables: ROI, ROA, debt-equity ratio, long term debt to capital employed ratio, total debt ratio and age. An exercise is carried out in this respect using debt-equity ratio, long term debt to capital employed ratio, total debt and age as Independent variable while using ROI and ROA as Dependent variables. Expecting findings are capital structure is significantly impact on company performance and capital structure measures are negatively related to firm performance.