2nd ICARE Student's Conference - 2016
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Item 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.Item Impact of Global Financial Crisis on Banking Sector Performance in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Priyadarshani, K.M.C.; Thilakarathne, P.M.C.Financial crisis is a situation in which the supply of money is outpaced by the demand for money. This means liquidity is quickly evaporated because available money is withdrawn from banks. The purpose of this study is to investigate impacts of global financial crisis on banking sector performance in Sri Lanka. It is based on the two objectives which were to assess relationship between financial crisis and bank performance and to examine impacts of Capital Adequacy, Assets Quality, Management Quality, Earnings and Liquidity on bank performance. Data was collected through the annual reports of selected commercial banks from 2007 to 2015.A descriptive statistics, correlation analysis and multiple regression analysis were used to investigate relationship between Capital Adequacy Ratio, Gross Non Performing Advances Ratio, Interest Coverage Ratio, Return on Equity and Liquid Assets Ratio with the Bank performance. The findings indicate that Capital Adequacy Ratio, Gross Non Performing Advances Ratio, Interest Coverage Ratio, Return on Equity had a significant relationship with bank performance. But Liquid Assets Ratio had a no significant relationship with bank performance. Thus the study concludes that global financial crisis significantly influenced on the bank performance. Final outcome of this research is adding knowledge to bank entities to get an idea about how they can preserve their performance within crisis period.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 An Analysis of Capital Structure and Its Impact on Performance: with Reference to Financial Institutions in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Balendra, V.; Madurapperuma, M.W.The capital structure of a firm is basically a combination of debt capital and equity capital. Which is deemed as appropriate to enhance its operations. A lot of investigations are being done on the implications of capital structure’s selection on organization’s value and its performance since the seminal work of Modigliani and Miller (1958). A wee little is empirically known about such implications in emerging economies such Sri Lanka. The purpose of this research is to explore empirically the impact of capital structure decisions on the financial sector organizations’ financial performance in Sri Lanka as one of emerging economies. Regression analysis is used in this research to identify the relationship between the leverage level and the performance of the financial institutions. Broad data covering the six year periods from 2009- 2015 of financial institutions in Sri Lanka are gathered and analyzed with the regression analysis. The data all are quantitative in nature and already available on Colombo stock exchange database (secondary evidence). There are sixty Financial Institutions in Sri Lanka and most of them are levered firms. Based on Return on Equity financial performance measurement and financial institutions’ leverage level the results revealed that leverage level has a weak level of negative impact and whilst controlling variable total assets has strong negative impact on organization’s financial performance.Item The Impact of Capital Structure on Profitability of Banks in Sri Lanka: With Special Reference to Licensed Commercial Banks(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Tharangani, D.L.M.; Wijesinghe, K.G.D.N.The concept of capital structure implies the way a firm finances its assets by the use of a mix of debt and equity. Capital structure decision is an essential one, because the profitability of an enterprise is directly affected by such a decision. This study aimed at contributing to the debate on capital structure by examining the impact of capital structure on profitability of licensed commercial banks in Sri Lanka for the period 2006 to 2015. Data was collected from panel data extracted from annual reports of Sri Lankan Commercial Banks and analyzed using Descriptive analysis, Correlation and Regression analysis. This study found that debt to equity ratio has significant negative relationship with Return on Assets, while debt to total funds ratio has significant positive relationship Return on Assets ratio. And debt to equity ratio has significant positive relationship with Return on Equity ratio, while debt to total funds ratio has significant negative relationship Return on Equity ratio. The outcomes of the study may guide banks, lenders and policy planners to establish better policy decisions of capital structure. Further, the study reinforces and refines the body of knowledge concerning to capital structure and profitability in Sri Lankan Banks.Item Determinants of Financial Performance in Micro Finance Institutions of Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Sudharika, W.P.A.; Madurapperuma, M.W.Financial sector plays a key role in the economic development. It is generally agreed that a strong and healthy banking system is a prerequisite for sustainable economic growth. Financial sector includes mainly the banking system and the microfinance institutions in the country. Microfinance promises to reduce poverty. To achieve this amazing objective Microfinance institutions have to developed strong enough in financial performance because donor constancy is not a given. Thus the question is: In what extent the MFIspecific, industry-specific and macroeconomic factors determinants the Sri Lankan micro finance industry financial performance from the period 2010- 2015. The study was based on a six years secondary data obtained from annual reports. Regarding the explanatory variables, operational efficiency ratio, debt to equity ratio and capital assets ratio affect MFIs financial performance significantly. The outcome of the study shows that GDP growth rate and the debt equity ratio have positive relationship. But GDP growth rate statistically insignificant effect on their financial performance. The capital assets ratio, debt equity ratio and operational efficiency ratio have statically significant. The Sri Lankan MFIs policy makers and managers should give high concern to the expense management and also the government and policy makers should work combining both poverty decrease and financial self- sufficiency of MFIs. And also MFIs have to emulate profit-making banking performs by effecting a sound financial management and good managerial governance to assure their financial performance and in the long run sustainability.Item Internet Adoption in SMEs in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Sudarshani, P.E.; Perera, H.A.P.L.The growth of information technology in the business world is spreading at a phenomenal rate. The uses of the internet for e-commerce purposes have seen a high increase due to growth in websites for commercial purposes. The success of a business organization stands at the usage of IT in their business. This paper aims to investigate empirically the decision of small and medium sized enterprises (SMEs) to adopt the internet in their business. This study investigates the major determining factors for e-commerce adoption in Srilankan SMEs. The data were collected using a standard questionnaire. SPSS software was used for analysis purpose. Analysis were carried out to investigate the adoption of Internet in Sri Lankan SMEs. The results show that knowledge of English language, Technical compatibility, perceive benefits and cost of web adoption have significant relationships with internet adoption, the results of the study of highly educated managers of SMEs also exposure a non-significant relationship between innovation adoption tendency and adoption of internet. This study provides more understanding of manager’s perceptions about internet adoption on their businesses. Those in promoting the web may find these results helpful in guiding their efforts.Item Impact of Service Quality on Customer Satisfaction: A Study of State Banks & Private Banks in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Siriwardana, D.A.; Rathnasiri, U.A.H.A.Commercial banks play a major role in the economic development of the country. Customers prefer to get the maximum satisfaction; hence providing better service quality is the key to success and gives competitive advantage. This research is solely focused on service quality to determine the customer satisfaction. The aim of this study is to identify the impact of service quality on customer satisfaction using service quality dimensions by comparing government banks and private banks in Sri Lanka. Primary data were collected through a questionnaire and the stratified simple random sampling method used. Data were collected from respondents representing two state banks and two local private banks in Colombo district on SERVQUAL scale measure. Descriptive analysis, correlation analysis and regression analysis were used to evaluate the level of service quality. The results indicated significant positive relationship between service quality and customer satisfaction in the banking sector. The research findings showed the offering of high quality service will increase the customer satisfaction level, which leads to high level of customer loyalty for successful performance of banks.Item 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.Item Impact of Competitive Ability on Financial Performance of Sri Lankan Banks(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Maduranga, B.I.C.; Aruppala, W.D.N.This research analyses the impact of competitive ability on financial performance of listed banks in Sri Lanka. Capital delivers a buffer against losses and thus it ensures safety and soundness of the financial institutions. It is initial requirement for any financial institution to maintain sufficient capital. Liquidity is a main concept that most of investors are not properly maintained and result of that financial plans could be fail to come through such critical time. Liquidity causes more financial issues than rest of factors. The study relied on secondary data and thus annual reports of the listed banks were used to acquiring data. Ratios were used to analyze the data and regression analysis was used to measure relationship of the variables. The main finding in the study is that capital adequacy and liquidity has contributes positively & negatively on financial performance of listed banks in Sri Lanka. The findings of this study is useful for make productive decisions on investing in Sri Lankan banks.