Junior Research Symposia

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Subject: search.filters.subject.Profitability

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    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.
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    Impact of Credit Risk Management on Profitability of Licensed Finance Companies in Sri Lanka
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Madusanka, A.P.; Bandara, R.M.S.
    The Licensed Finance Companies (LFCs) sector plays a prominent role within the financial system in Sri Lanka. LFCs are dealing with massive loan portfolio in the country and credit risk is one of the most significant risks which is faced by LFCs. The main purpose of the research is to investigate impact of credit risk management on profitability of LFCs in Sri Lanka. In the research model, Return On Assets (ROA) and Return On Equity (ROE) are the indicators for Profitability of LFCs, and Gross Non- Performing Loans (GNPL), Provision for Loss Facilities / Credit Facilities ratio (PLFCF), Total Credit Interest/Credit Facilities ratio (TCICF), Credit Recovery Cost/Credit Interest ratio (CRCCI), and Capital Adequacy Ratio (CAR) are indicators for credit risk management. The research collected data from 30 LFCs in Sri Lanka from 2011 to 2016 and formulated five hypotheses to achieve the research objective. A series of statistical tests were performed in order to test the impact of credit risk management on profitability of LFCs in Sri Lanka. Results disclosed that there is a significant negative impact of the credit risk indicators of GNPL and PLFCF on profitability of LFCs in Sri Lanka and Overall findings revealed that there is significant impact of credit risk management on profitability of LFCs in Sri Lanka. This finding indicates that the better the credit risk management is, the higher the profitability to the LFCs in Sri Lanka.
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    The Effect of Capital Structure on Profitability in Sri Lankan Listed Companies
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Madhubhashani, M.A.C.D.; Jayamaha, A.
    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. All decision relevant to the capital structure is crucial for every company. The decision is very impotent due to impact of this decision has power to achieve competitive advantage as well as the prove survival of the company (Shubita & Alsawalhah, 2012). 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 & 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 data from financial statements of the selected companies and descriptive analysis, correlation 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). The overall result of the study suggests short term debt and debt to equity in Sri Lankan context to be negatively related to profitability of the company. As well as long term debt to total assets and sales growth of the firm positively influenced to the profitability of the company.
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    The Effect of Corporate Governance on Performance of the banking Industry in Sri Lanka
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Lekamge, A.L.I.C.; Thilakarathne, C.R.
    In the worst financial crisis, the banking sector faces to more difficulties. According to the studies that difficulties build on the lack of corporate governance in banks and companies. Purpose of this study was to identify the impact of Corporate Governance for the Banking Profitability in Sri Lanka. Board size, Board Ownership, Management ownership and the Board balance were used as the determinant factors and the Return on Assets was used for the performance indicator. Nine listed Commercial Banks over nine years were selected for the analysis. Descriptive analysis, Pearson Correlation and the regression analysis methods were used to find out relationship between the corporate governance and banking performance. One main model constructed under the regression analysis. Result of the analysis were found that there was significant relationship between Board size and the Board ownership. There was no significance relationship between Management Ownership and the Board Balance. According to the analysis the overall model is significant and the Corporate Governance is significantly affected to the Profitability of the banking industry in Sri Lanka.
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    Impact of Corporate Social Responsibility on Firm Financial Performance: Evidence from the Listed Manufacturing Companies in Sri Lanka
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Lakshitha, W.R.; Perera, H.A.P.L.
    This study analyzes the relationship between corporate social responsibility (CSR) practices and Firm Financial Performance of the listed manufacturing companies in Sri Lanka with the utilization of data, obtained from thirty two (32) firms' audited annual report and financial statements between 2010-2015, Variables used for the study include, CSR spending of the company (salaries and wages spending of employees, donation in the form of health, environment, sports, community and education etc., employees’ welfare funds & Other benefits), Return on Assets (ROA), Net profit ratio (NPR) and control variable (total assets). Previous literatures provide conflicting results on the relationship between corporate social responsibility (CSR) practice and firm financial performance with some studies showing a positive relationship, others negative and still others showing that there is no relationship between the two variables. It is with this background that this study sought to establish the relationship between corporate social responsibility practice and financial performance. The correlation and regression tests were conducted by using SPSS. The results suggested significant negative relationship between CSR and ROA without adding control variable and adding the control variable. As well as there is a significant negative relationship between CSR and NPR with and without adding control variable. The actual responsibility of conducting CSR activities are, to share their profits with society as without them they could not survive. Also future research should be conducted to quantify how much or to what degree these CSR programs have impacted on the society and its corresponding value generation for the company. The value from a practical perspective, the study is required to assess if investments in CSR is worthwhile or not.
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    Impact of Liquidity on Profitability: With Special Reference to Listed Manufacturing Companies in Sri Lanka
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Hirantha, P.A.N.; Rajapakse, R.M.D.A.P.
    The ultimate goal of the companies is to enhance the wealth of the shareholders. For that purpose, the liquidity and profitability plays the vital and crucial role. That brings the problem that provided the basis for his research “how liquidity effects on profitability of listed manufacturing companies in Sri Lanka?” Especially the liquidity and its management affects to a great extent to the growth and profitability of a firm. The liquidity management becomes most important one as the inadequate liquidity may injurious to the smooth operations of the firm as well as the excess liquidity can be disturbed to achieve the greater profits. In this way, the present study is aimed to investigate the relationship between liquidity and profitability. The analysis is based on quarterly data of 20 manufacturing companies listed in the Colombo Stock Exchange over a period of past six years from 2010 to 2015. Return on equity and Return on assets were used as the dependent variables while Quick ratio, Current ratio and Liquid ratio were used as independent variable. Correlation and regression analysis as well as the descriptive statistics were applied in the analysis and findings suggest that there is a significant relationship exists between liquidity and profitability listed manufacturing companies in Sri Lanka. According to this study there has an influence in liquidity on the profitability of manufacturing companies.
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    The Impact of Credit Risk on Bank Profitability: With Special Reference to Sri Lankan Licensed Commercial Banks in Sri Lanka
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Sampath, M.G.I.; Aruppla, W.D.N.
    Lending is one of the main incomes generating activity in commercial banks. Credit risk occurs in connection with lending. Among the different risks facing by banks risks, credit risk is considered as one of the major determinant of bank profitability because of the number and diversity of stakeholders affected. The objective of the study is to assess the impact of credit risk on profitability of licensed commercial banks in Sri Lanka for the period 2011 to 2015. Fifteen commercial banks were selected for the study and data was collected through published annual reports and using Eview Statistic Software & SPSS Software was performed Descriptive analysis, Correlation and Regression analysis. This study found that non-performing loan (NPL) ratio has a significant impact on Return on Assets (ROA) ratio, while total loan to total deposit (TLTD) ratio has no significant impact on Return on Assets (ROA) ratio. Furthermore, non-performing loan (NPL) ratio has significant positive impact on Return on Equity (ROE) ratio, while total loan to total deposit (TLTD) ratio has significant negative impact on Return on Equity (ROE) ratio. Findings of this study contribute to formulate efficient and effective credit risk management control policies for licensed commercial banks in Sri Lanka.
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    Impact of Bank-Specific and Macroeconomic Determinants on Commercial Bank Profitability: with Reference to Systematically Important Private Commercial Banks in Sri Lanka
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Samarathunga, S.M.D.S.S.; Madurapperuma, M.W.
    Bank-specific and Macroeconomic factors have substantial repercussions on the performance of commercial banking sector in Sri Lanka, the favorable macroeconomic environment seems to stimulate higher profits. (Weerasainghe V.E.I.W & Perera T.R, 2013).The return on Assets which is a major measure of performance of commercial banks is a function of bankspecific determinants and macroeconomic determinants. A proper functioning of banking system facilitates a rapid economic growth enhancing savings and investments. The performance of the Sri Lankan commercial banks, measured by the Return on Assets (ROA) appeared to be stronger in the recent past without facing any significant fluctuations. This paper examined the impact of bank-specific and macroeconomic determinants on the profitability of licensed commercial banks. The study uses quarterly data from 2010-2015 relating to the bank-specific and macroeconomic indicators of commercial banking profitability by carrying out a multiple panel regression. According to empirical results, Macroeconomic determinants, gross domestic production rate and inflation rate found to be having a significant impact on the bank profitability with a positive relationship between the Return on Assets of a bank. The results further show that bank-specific factors of past period performance, net interest margin, bank size, liquidity risk, credit risk and capital adequacy have contributed significantly to the profitability of the commercial banks. The implication of the study is that efficient management of the bank-specific factors and implementation of favorable economic policies lead to an economic growth can contribute immensely to uplift the performance of the banking industry in Sri Lanka.
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    Impact on Working Capital Management on Firm Performance
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Rasadeepani, U.G.G.; Rathnasiri, U.A.H.A.
    Working capital has an effect on firm profitability as well as on liquidity position. Working capital is described as the capital available to meet the dayto- day operations and, depending on the industry, it could be a relatively high percentage of the total assets of the organization. Management of working capital is an important component of corporate financial management because it directly affects the profitability of the firm. This paper investigates the relationship between the working capital and the firm’s profitability for a sample of 15 Sri Lankan manufacturing companies listed on the Colombo Stock Exchange(CSE) for the period of 4 years from 2012-2015. The secondary data analyses by applying correlation, descriptive and multiple regression analysis. The main objective of this research to identify the relationship between working capital management and firms financial performance and other secondary objectives to identify relationship between average inventory period, average receivable period, average payable period, current ratio, quick ratio and return on assets of the firms. The results shows that there is a relationship between variables of the working capital and profitability of the firm. There is a negative relationship between average inventory period and profitability of the firm and positive relationship between average receivable period, average payable period, current ratio and quick ratio against profitability of the firm. This paper highlights the importance of managing working capital components to ensure an improvement in firm’s profitability and to operate effectively and efficiently.
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    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.