Browsing by Author "Bandara, R.M.S."

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Aptitude of internal control systems to prevent and detect financial statement frauds in Sri Lanka
(Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Bandara, R.M.S.; Sujeewa, G.M.M.; Rathnasiri, U.A.H.A.
The emerging discipline of Forensic Accounting is a relatively new profession in Sri Lanka even though it was developed with many ideas and techniques centuries ago. The profession has been molded and shaped by many aspects of the shifting the world including the economy, society, and legislation and it has become one of key arenas for government, practitioners, investors, general public and regulatory bodies. Corporate failures all over the world time to time has enlighten the necessity of forensic accounting profession giving more attention to financial statement frauds. The small and medium organizations tend to suffer excessively large losses due to financial statement frauds and it will increase the importance of forensic accounting practices in Sri Lanka because more organizations are in small and medium scale in nature. Process affected by organization’s structure, work and authority flows, people and management information systems designed to help the organization accomplice specific goals or objectives as the internal control systems of an entity playing a vital role in detecting and preventing financial statement frauds. The current exploratory study examines the capability of internal control systems in preventing and detecting the financial statement frauds. Structured interviews, questionnaires and empirical research findings on the practice of forensic accounting were used to analyze capability of internal control systems for preventing and detecting the financial statement frauds in Sri Lankan companies. Purposive sampling method was used to select the sample and 25 senior managers and 10 auditors were participated as respondents for the research representing 24 private and companies. The study identified control environment and monitoring as the independent variables and number of frauds and its value as the dependent variables. The study identifies that the management integrity and the soundness of internal control systems can help to reduce the probability of occurring financial statement frauds. Further it is revealed that 68% of business entities’ internal control systems have not been facilitated for detection of frauds. Moreover the study recommends that effective and efficient internal control policies and procedures put in place should be monitored to prevent and detect financial statement frauds in Sri Lankan companies.
Are small and medium enterprises allowed to revaluation?
(Department of Accountancy, University of Kelaniya, 2014) Dilhara, U.H.N.; Bandara, R.M.S.
Challenges of IFRS Convergences of Insurance Industries in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Premarathna, H.S.M.; Bandara, R.M.S.
The Institute of Chartered Accountants of Sri Lanka (CASL) committed to convergence International Financial Reporting Standards (IFRS) with effect from 1st January 2012. The convergence have been generated significant challenges and problems on financial reporting in the terms of recognition, measurement, disclosures on accounting policies, consolidation and reporting to the insurance companies operated in Sri Lanka. This research highlights the challenges in convergence of IFRS in Sri Lankan insurance sector and the possible ways to overcome those challenges. The qualitative method was used for the study based on both primary and secondary data gathered from interviewing of selected insurance companies and annual reports. The measures taken by CASL and the other regulatory bodies to facilitate the smooth convergence to IFRS were admirable. The remedial actions such as consulting reputed audit and advisory firms relating to IFRS issues, giving foreign learning opportunity to the accounting staff to obtained the IFRS knowledge, the knowledge of IFRS on newly recruited accounting staff have been taken to overcome the problems and challenges.
Combating Money Laundering: Effectiveness of Measures Taken by Sri Lankan Banks to Comply with Regulatory Frameworks
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Perera, A.K.S.S.; Bandara, R.M.S.
Money laundering poses ongoing challenges for countries across the globe. The complexities associated with these challenges vary from one country to another, primarily due to factors such as the unique nature of their financial sectors, the specific anti-money laundering (AML) icies they have adopted, and the capabilities of their central banks in devising a comprehensive framework to address these issues effectively. To overcome these challenges and establish robust AML policies, each country must develop its framework through its central bank. This framework should aim to eliminate obstacles and enhance the effectiveness of the country's AML efforts. To accomplish this, careful identification and inclusion of relevant factors is essential. The paper aims to assess the effectiveness of measures taken by banks in Sri Lanka to comply with regulatory frameworks in combating money laundering. To do so mainly three areas are being considered such as commitment towards legislative compliances, adequate tools and devices, and employee training. To collect data a questionnaire was sent to banks of Sri Lanka and 117 responses were received the questions mainly targeted the executives and managers working at banks of Sri Lanka. SPSS statistics software was used for the data analysis part and a regression model was run considering the assumptions for to run regression model the results of the research showed that the banks of Sri Lanka are committed to legislative compliance and do have adequate tools and devices and do sufficient employee training. Apart from that research also identified that there are constraints that banks face when adapting technological advancements and international collaboration is not up to standards, so recommendations were provided such as investing in continuous technological advancements to stay competitive and aligned with global AML technological standards, AI and machine learning tools, such as natural language processing and predictive analytics, can vastly improve the effectiveness and efficiency of AML and Know Your Customer (KYC) programs by automating complex tasks, identifying patterns, and reducing false positives. The research focuses on assessing the effectiveness of measures in the banking sector in Sri Lanka, excluding non-banking financial institutions. It examines compliance requirements in employee training, legislative compliance commitment, and adequate tools. The study's scope may be limited by data availability, resources, and participant access.
Director’s loan classification as equity instrument
(Department of Accountancy, University of Kelaniya, 2014) Dodangoda, R.; Bandara, R.M.S.
The Effect of Financial Micro Factors on Stock Prices: Special Reference to the Manufacturing Sector in the Colombo Stock Exchange (CSE)
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Nishanthi, W.P.L.; Bandara, R.M.S.
The objective of the study was to identify the effect of selected micro variables on the stock prices of selected manufacturing companies listed in Colombo Stock Exchange (CSE). Researcher used the secondary data which was collected from the annual reports of selected companies for the period of 5 years. The sample of 29 companies was selected for this study representing manufacturing sector entities. In this study, Return on Equity, Book Value per Share, Earnings Per Share, Price Earnings Ratio, Dividend Per Share, Dividend Yield, Firm Size, and Financial Leverage were used as independent variables with the Stock Prices as the dependent variable. The data have been analyzed by using descriptive statistics, correlation and regression analysis to find out the effect of the micro variables on the stock prices. According to the results of the overall analysis, there was significant impact of book value per share, dividend per share, dividend yield, firm size and financial leverage on the stock prices. Further, it was identified that there was an insignificant impact of return on equity, earnings per share, price earnings ratio on the stock prices. According to the final result majority of financial micro factors significantly affect to the stock prices.
Error classification of elements included in statement of financial position
(Department of Accountancy, University of Kelaniya, 2014) Senarathna, S.M.S.; Bandara, R.M.S.
How to Treat in Transfer Pricing Requirement?
(Department of Accountancy, University of Kelaniya, 2016) Keerthirathne, D.G.I.C.; Bandara, R.M.S.
XYZ (Pvt) Ltd is a fully owned subsidiary of the PQR Holdings PLC. Its main business operation is providing telecommunication services and solution. XYZ (Pvt) Ltd has faced to a credit shortage issue as it provide services on credit basis. XYZ (Pvt) Ltd had two alternatives to funding cash requirement to its telecommunication projects, alternatives are by taking Bank loan with average market rate or funding through its parent company with reduced or no interest. XYZ (Pvt) Ltd with influence of PQR Holdings PLC will accepting second alterative which obtain tax saving in group perspective. In this scenario XYZ (Pvt) Ltd will be able to continue its business operations and subsequent settlement of loan will be taken place with zero or reduced interest.
Identification of Influential Factors towards the Investment Decisions: with Special Reference to Individual Investors of CSE
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Waniganeththi, W.V.D.A.M.; Bandara, R.M.S.
Individual investors consider various factors to make their investment decisions. The main objective of this study is to identify the most influential factors towards the individual investors’ decisions at CSE. The study was carried out with the sample of fifty respondents representing individual investors in Colombo & Gampaha district. Structured, questionnaire was used to collect data and data was analyzed using descriptive statistical, regression analysis and factor analysis techniques. According to the findings, subjective factors such as reputation of the company and quality of product are more influential than other factors. Among economic factors, capital appreciation was the highly influential factor. Stock Marketability is the mostly influential factor among speculative factors and reputation of the firms is the mainly influential subjective factor. Company ethics are the most substantial factor in cultural factors. Further, it was noted that the companies more focus on capital appreciation in their short term decision making.
Impact of Audit Committee Characteristics on Financial Performance of Listed Finance Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Dissanayake, W.G.P.K.; Bandara, R.M.S.
An audit committee is an operating committee of a company's board of directors and it is a compulsory requirement for Sri Lankan listed companies according to the ‘Code of best practices on corporate governance’ published by the Institute of Chartered Accountants of Sri Lanka and Security and Exchange Commission of Sri Lanka. This study was attempt to find out the relationship between the audit committee characteristics such as Size of the Audit Committee, Independence of the Audit Committee, Audit Committee Meeting Frequency, Financial Literacy of Audit Committee Members and financial performance measured by the Return on Assets and Return on Equity of Sri Lankan finance companies. Twenty listed finance companies were selected as sample for the period of 2012 to 2016. Descriptive statistics, correlation analysis and multiple regression analysis were used to analyze the data. According to the analysis, audit committee independence and audit committee financial literacy showed a significant positive relationship with firms’ financial performance. Audit committee meeting frequency significantly related only with financial performance indicator of ROE. However audit committee size did not have significant relationship with firm performance. The results is beneficial to shareholders and companies’ board to make appropriate decisions about audit committee characteristics to enhance firm financial performanc
The Impact of Audit Quality on Financial Reporting Quality: Evidence from Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Weerasekara, W.A.P.S.; Bandara, R.M.S.
The quality of the audit has been vital since accounting scandals like WorldCom, Enron, wire card scandals, and other risks have happened in the past. This is because auditors offer third-party assurance regarding the financial information of organizations. Then, Stakeholders mostly depend on the financial statements published by organizations when making decisions. As a result, stakeholders are becoming increasingly concerned regarding the accuracy of financial reporting. It is therefore necessary to examine every way in which audit quality affects the quality of financial reporting. Hence, this study mainly focuses on examining the impact of audit quality on the financial reporting quality of S&P Sri Lanka 20 index companies from 2013 to 2022. The sample of this study consisted of 15 non-financial companies, excluding the rest of the companies from the population due to their special nature. Further, this research used the data of companies’ annual reports, which were extracted from the CSE website. Audit firm size, audit firm tenure, and audit fees are used as surrogates for audit quality (AQ). While earnings management is a surrogate for financial reporting quality (FRQ), which is the dependent variable, FRQ is measured through discretionary accruals. Then, the Results provided that audit firm size (AFS) has an insignificant impact on financial reporting quality (FRQ), as it was not supported by my first hypothesis. However, audit firm tenure (AFT) has a significant negative impact on financial reporting quality (FRQ). Moreover, it recommends that to raise the FRQ, the AFT should not be exceeded for longer than three years. On the other hand, audit fees (AF) showed a significant positive impact on financial reporting quality (FRQ). It indicates that higher audit fees result in improved FRQ. Then, the results of this study help to improve investor trust in the decision-making process and give authorities guidance on where rules and regulations need to be updated.
The Impact of Cash Conversion Cycle on Firms Profitability Before, During and After Covid-19 Pandemic: Evidence from Listed Hotels in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Ranasinghe, R.A.R.H.; Bandara, R.M.S.
Efficient working capital management ensures the company’s operations are smoothly continuing by effectively managing company inventory, receivables, and payables. The hotel sector is regarded as the most consummate sector for the Sri Lankan economy due to it has come up with unorthodox strategies to increase income fleetly, decrease direct and overhead expenses, and set itself up for higher future aggrandizement. Also, most of the Sri Lankan hotels must primarily depend on internal cash flows to pay current liabilities and capital growth. The study's specific research goal is to investigate the impact of the firm's cash conversion cycle on its profitability in publicly listed companies in the hospitality sector and the effect of each component of CCC on the profitability of publicly listed companies in the hospitality sector in Sri Lanka. Methodology using a quantitative approach verifies hypotheses and makes necessary corrections at the study’s conclusion. Moreover, cross-sectional data from 2018/19 to 2021/22, except 2020/21, is used in quantitative methods, which consistently use a larger sample size than qualitative methods. The analysis done during the during-COVID-19 period identified the Probability F statistic 0.001which conveys that there is 0.05 significance and the explanatory power of the regression model during the COVID-19 shows 46% which also appears that there is a significant impact from the cash conversion cycle on firms’ profitability and businesses need to be more concerned about CCC during crisis period since it can lessen reputational harm by giving stakeholders accurate and timely information.
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.
The Impact of Environmental Sustainability on Financial Performance in the Food, Beverage, and Tobacco Industry in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Madhuwanthi, P.V.D.S.; Bandara, R.M.S.
This study investigates the Impact of Environmental Sustainability (ES) on Financial Performance (FP) in the Food, Beverage, and Tobacco (FBT) industry in Sri Lanka. Sustainability, as defined by Clough (2006) and Tatlici and Sertyesilisik (2019), involves meeting present needs while preserving the ability to cater to future generations. The study focuses on the Economic, Social, and Environmental dimensions of sustainability, emphasizing ES as a systematic process of economic activities bound by environmental constraints. Rapid global expansion and technological advancements in international trade have heightened environmental concerns, evident in rising CO2 emissions and health risks. Firms worldwide, including in Sri Lanka, are adopting ES practices, often disclosed through ES reporting. Despite the costs, firms anticipate long-term benefits, both financial and non-financial. This study centers on ES practices' impact on FP, crucial in any business firm. The researcher selects the FBT industry due to its categorization under Consumer Staples and its association with pollution. FBT firms must adhere to ES rules, incurring additional costs to maintain profitability. The investigation aims to fill the research gap on the ES-FP link in the FBT sector, considering the industry's unique challenges. The research question explores the impact of ES on FP in the FBT industry, with objectives to measure and analyze this relationship. The significance lies in providing empirical evidence on the ES-FP connection, aiding decision-makers in the industry, guiding policymakers, and supporting sustainable development goals. The study addresses limitations, emphasizing the need for a larger, more varied sample and cautious consideration of industry-specific factors.
The Impact of Financial Reporting Quality on Investment Efficiency in Sri Lanka: Evidence from Listed Firms in Colombo Stock Exchange
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Bhagya, W.C.; Bandara, R.M.S.
One of the most essential functions of financial reporting is to help organizations make better investment decisions. The relationship between the financial reporting quality and investment efficiency, overinvestment, and underinvestment is complex and diverse. Financial reporting quality relates to a company's financial information's accuracy, openness, and dependability. The primary goal of this research is to determine the relationship between financial reporting quality and investment efficiency, overinvestment, and underinvestment in a sample of 30 companies with 270 firm-year data between 2014 and 2022. This study is based on secondary data gathered from published annual reports of listed companies in the Consumer Service Industry, Diversified Financial Industry, and Food, Beverage, and Tobacco Industry. The data in this study was analyzed using descriptive statistics, correlation analysis, and regression analysis. The study's findings revealed that in Sri Lanka, there is a positive relationship between financial reporting quality and investment efficiency, as well as a negative relationship between financial reporting quality and overinvestment and underinvestment.
The Impact of Firm-Specific Factors on Environmental, Social and Governance Reporting in Sri Lanka: Evidence from Listed Manufacturing Sector Companies of Colombo Stock Exchange
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Madhuwanthi, M.N.G.G.H.; Bandara, R.M.S.
The main aim of this study is to identify the impact of firm-specific factors on Environmental, Social, and Governance Reporting (ESG) in manufacturing sector companies in the Colombo Stock Exchange (CSE). This paper analyses the relationship between some firm-specific factors and the Environmental, Social, and Governance Reporting in manufacturing sector companies in CSE. This study was based on 29 listed manufacturing sector companies in CSE. The ESG Disclosures in annual reports of the 29 listed companies for the past five years (2018-2022) were analyzed. The state of Environmental, Social, and Governance reporting for each company for each year was computed GRI disclosures included in annual reports using a scoring system developed by Dragmoir (2010) inspired by the GRI guidelines and multiple regressions were conducted to identify the relationship between firm-specific factors and ESG Reporting. Based on this study's research findings, Market Performance and Size of the company positively impact Environmental, Social, and Governance reporting of manufacturing sector companies in CSE. The profitability of the company and Leverage harms the Environmental, Social, and Governance Reporting of manufacturing sector companies in CSE. This research limited only four variables of firm-specific factors and one industry group of the Colombo stock exchange. To the best of the knowledge of researchers, there has been no study conducted before that verifies the Firm Specific Factors' impact on Environmental, Social, and Governance Reporting of manufacturing sector companies in CSE.
Impact of Management Accounting Practices on Financial Performance of Listed Manufacturing Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Madhuka, H.B.N.; Bandara, R.M.S.
Management accounting measures analyzes and reports financial and nonfinancial information that helps managers to make decisions, implement strategy to achieve the goals of an organization. The main purpose of this study was to examine the impact of Management Accounting Practices (MAP) on Financial Performance (FP) of listed manufacturing companies in Sri Lanka. Financial Performance was measured by Return on Assets. Costing system, Budgeting system, performance evaluation system, and equity issue and leverage were used as measures of management accounting practices. Total population of 32 manufacturing companies were drawn as the target sample to collect required data for the study. Structured questioner was used to gather primary data and annual reports of the selected companies were used as secondary data sources. Analysis was conducted by using Statistical Package for Social Sciences (SPSS). According to study, it was revealed that there was significant impact of costing system practices to FP and it was the highly practiced and influential MAP amongst the manufacturing companies in Sri Lanka. Further, budgeting system, performance evaluation system, equity issue and leverage respectively showed an impact to financial performance. Thus, it is advisable to manufacturing companies to pay attention for the costing system to improve their financial performance.
Impact of Working Capital Investment Policy on Firm Value in Sri Lankan Manufacturing Companies
(Faculty of Graduate Studies, University of Kelaniya, 2015) Bandara, R.M.S.
Corporate financial officers identify the Working Capital Management (WCM) as being important determinant to their firms‘ value. WCM is defined as the ability of the organization to fund the short term assets and short term liabilities. In practice, WCM has become one of the most important issues in the organizations. The issue is vital in the manufacturing sector organizations due to employment of high amount of short term assets in day to day operations. The study investigates the impact of firms‘ WCM Investment Policy (IP) on firm value in Sri Lankan companies. The sample of the study was 36 manufacturing companies listed in the Colombo Stock Exchange for the period of 2008/09 to 2012/13 which comprises 180 firm year observations. Correlation and panel regression analysis were employed as measures of analysis. Firms‘ IP was used as an independent variable. Firm value was measured in terms of Economic Value Addition (EVA) as dependent variable of the study. IP explains the way in which a firm invests their funds in short term or long term assets. Where a minimal level of investment is in current assets in comparison with fixed assets, it closes to the more aggressive IP and percentage of current assets on total asset was used as a measurement of IP. EVA indicates economic profitability and it assesses the managerial effectiveness in a given year by measuring profits, after subtracting the expected return to shareholders. Creating sustainable improvements in EVA is synonymous with increasing shareholder wealth (Stewart, 1991). Both correlation and regression analysis results proved that there is a statistically insignificant but negative relationship between IP and EVA providing evidence that manufacturing companies having more current assets as a percentage of total assets will decrease its EVA of manufacturing sector companies in Sri Lanka.
The Impact of Working Capital Management on Profitability in SME Enterprises within Sri Lanka's Western Province: A Comparative Analysis across Post, and During the COVID-19 Pandemic Periods
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya Sri Lanka, 2023) Hansani, A.M.P.; Bandara, R.M.S.
Especially the COVID-19 pandemic has had a greater effect on the business world. Considering this, the purpose of this study is to determine how WCM impacted firm Performance before and during the Covid-19 pandemic in Sri Lanka. All businesses have regarded working capital management as a helpful tool. Working capital management is crucial for the company to succeed. For businesses to be sustainable, working capital management must be at its best. WCM's objective is to make sure that the company can carry on with its operations and has enough cash flow to pay down maturing short-term debt as well as anticipated operational expenses. Depending on the industry, WCM may vary. So, this study investigates how COVID-19 impacts the relationship between WCM and the business performance of Sri Lanka's SMEs companies. The study's goals are to assess how working capital management affects firm Performance and to determine how COVID-19 has affected both working capital management and the Performance of SMEs. 54 SMEs that were during the years 2020 and 2022 make up the sample. Accordingly, Audited financial reports were employed to collect secondary quantitative data for this study. While Performance was measured by Return on Assets (ROA), the WCM was quantified in terms of Inventory Turnover Period (ITP), Average Collection Period (ACP), and Average Payment period (APP). The data shows that ITP has a substantial negative influence on the ROA, while APP has a significant positive impact. The study also discovered that the ACP has no significant impact on the firm's Performance. Findings on the effect of COVID on WCM showed that the organization was significantly impacted by the pandemic scenario in the nation and that their Performance in the SMEs sector was during and post COVID.
The Impact of Working Capital Management on Profitability: Expolanka Case Study
(Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Ismail, I.; Bandara, R.M.S.
Commercial Organizations operate with the motive of improving shareholder wealth. Organizations are expected to manage their long term and short term financial resources to achieve the objective of shareholder profit maximization which is in line with maximization of wealth. In the backdrop of competitive landscape and scarcity of financial resources, the effective and efficient management of working capital is of paramount importance. This leads to companies giving priority in managing their working capital. The purpose of this study is to examine the Impact of Working Capital Management (WCM) on Profitability. To unearth answers for this question, 183 firm year observations covering 4 industry segments of Expolanka subsidiaries were investigated. The study covered five financial years from 2009 to 2014. Days sales outstanding, days payables outstanding, days inventory outstanding and cash conversions cycle were used as independent variables to measure WCM while gross profit margin, net profit margin, return on total assets and return on total equity were used as dependent variables to measure profitability. Pearson’s correlation analysis and regression analysis was used to analyst the relationship between these variables. According to results, it was evidenced that there is statistically significant positive relationship between Days sales outstanding and the Gross profit and Net Profit in Expolanka subsidiaries. Further there is statistically significant positive relationship between days payable outstanding and gross profit. Inventory days outstanding with gross profit has recorded statistically significant positive relationship. Cash conversion cycle has recorded significantly negative relationship with Gross profit and Net profit. Accordingly it was evidenced that shorter cash conversion cycle increases the profitability in Expolanka subsidiaries.