Symposia & Conferences
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Item 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.Item The Determinants of Capital Structure: Evidence from Listed Manufacturing Companies in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Kuruvita, K.A.S.P.; Jayamaha, A.The aim of this study is to investigate, the factors that affect to the capital structure decision of manufacturing companies in Sri Lanka. Capital structure decision is most debatable topic in the current business environment. There are several factors which determine the leverage level of the firm. Therefore, it is more essential to identify the key firm specific factors, which determined the leverage of the firm. Different capital structure theories are reviewed (Modigliani – Miller Theory, Pecking order theory, Static trade-off theory and Agency cost theory) in order to formulate hypotheses regarding the determinants of capital structure of the listed manufacturing companies. For this study, a sample of 28 listed manufacturing companies was considered for the period 2011 to 2015. Five firm specific explanatory variables (Tangibility, Profitability, Growth, Age of the company and Tax-shield) were selected to discover what determines capital structure. This study employs Descriptive analysis, correlation analysis and multiple regression analysis to measure relationship between variables, individual and overall impact on optimal capital structure and to test the operational hypotheses. The major result of the study indicated that Age, Profitability and tax-shield variables are the significant firm specific determinants of capital structure in Sri Lankan manufacturing companies. In addition to this, the two variables (Tangibility of Assets and Profitability) showed negative relationship between leverage (Debt equity ratio). That negative result consistent with implication of pecking order theory. Remaining selected three variables (Growth rate, Age, Tax-shield) are positively correlated with capital structure, which is help to prove trade-off theory, and agency cost theory. The researcher believes that research findings should help managers to make optimal capital structure decisions.Item Impact of Capital Structure on Firm Financial Performance of Manufacturing Sector Companies in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Fernando, W.R.S.; Jayamaha, A.The discussion about the optimum capital structure has been a core topic in corporate finance from several years in Sri Lanka. Capital structure defines as a combination of debt capital and equity capital in an organization. Organizations have different financing sources. It can be categorize into two sources, the internal financing and external financing. It is challenging for firms to identify the right mixture of debt and equity to achieve firms goals. This study was investigated the relationship between capital structure and firms financial performance of manufacturing listed companies in Sri Lanka. The sample of the study consisted of 14 manufacturing listed companies in Sri Lanka. This analysis is done by analyzing the financial statements of these companies from 2010 to 2015. The findings revealed that capital structure as measured by debt to equity ratio (DE) had statistically insignificant positive relationship with financial performance (ROA). Whereas long term debt to total assets (LDTA) had statistically significant negative relationship with financial performance (ROA) and similarly, short term debt to total assets (SDTA) had a negative and statistically significant relationship with financial performance (ROA).Item Capital Structure Effectiveness on Financial Performance of Manufacturing Firms in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Pathiraja, P.M.K.K.; Jayamaha, A.Capital structure shows a significant role in financial decision making process in any business organization. Capital structure decision is more important because organizations need to maximize return and growth the value of the firm. Manager’s responsibility is a decide mix of debt capital and equity capital then it increase the value of the firm. Objective of this research is examine the impact of Capital Structure on financial Performance of manufacturing firms in Sri Lanka.by using 25 firms listed in Colombo stock exchange In this study data collect from secondary evidence through Annual Reports published by company which listed in Colombo stock exchange. There are four variables use for this study. Return on Asset (ROA) is a dependent variable and other explanatory variables are Debt to equity Ratio (DER), Long term Debt Ratio (LTDR) and Debt to Asset Ratio (DAR). Considering the relationship between the capital structure and financial performance. In debt to equity ratio has a negative relationship between Return on Asset and long term debt ratio has an insignificant negative relationship with ROA .and In Debt to Asset Ratio has a positive relationship between ROA. Relationship established between the capital structure and the financing structure is a part whole type relationship can be seen. It is recommended that firms should use more of equity than debt in financing their business activities. To get the better investment decision of mix of capital structure recommend to establish performance standards and those are properly communicate to the investors.