2nd ICARE Student's Conference - 2016

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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.
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.
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.
Tax Practices in Sri Lanka: Evidence from Tax Payer’s Perception
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Senevirathne, R.P.S.M.; Perera, H.A.P.L.
Tax payer plays a major role in the economy. The main purpose of this research was to identify taxpayer’s perception of current tax practices in Sri Lanka. The taxpayer perception is one of the most powerful variables affected for the current practice of taxation in Sri Lanka. Taxpayer’s perception is one of the sources of making decisions about the current practice of taxation in Sri Lanka. It is with the help of taxpayer’s perception that the current practice of taxation in Sri Lanka can be reviewed more clearly and decisions made from such reviews. In Sri Lanka there are some population groups. We can categorize them as religion, age and race. These different population groups may have differing perceptions about current tax practices in Sri Lanka. Tax payer’s perception is also may depends on some economic factors of the business such as number of years, monthly income of the business and etc. Other factors are taxpayer’s knowledge about taxation and taxpayer’s behavior and attitudes. This research was attempted to review current practice of taxation in Sri Lanka; a research of taxpayer perception by using the questionnaire, given to businessman’s in Colombo district. This research will help to the Department of Inland Revenue to identify taxpayer perception about current tax practices in Sri Lanka. Then Department of Inland Revenue can get future decisions about future tax practices in Sri Lanka.
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.
Corporate Sustainability Reporting Practices of Financial Service Sector Institutions in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Akram, R.M.W.; Thilakarathne, P.M.C.
This study aims to explore the practices of sustainability reporting by leading financial services sector institutions in Sri Lanka when compared to GRI guidelines. The GRI guidelines which is used for the comparison purpose for the Financial Services sector (FSS) institutions include both GRI G4 framework and 16 GRI FSS specific performance indicators. In this study, the researcher investigated the FSS’s reporting in five wide areas of sustainability, which include environment, labor practices and decent works, product responsibility, human rights and society. The annual reports published in 2015 related to 15 leading financial institutions, which are listed on the Colombo Stock Exchange (CSE) were examined and coded using a technique called as content analysis.The overall findings of the research suggests that there is a lack of reporting on sustainability, however when the extent of disclosure is concerned, the society related information is broadly disclosed which is followed by disclosures on product responsibility and the issues related to environment. Moreover, the disclosures related to labor practices and decent work and human rights related information were relatively rare in the reports of financial institutions. Further, on the matter FSS- disclosures, less than 30% of the financial institutions have disclosed out of all sample financial institutions. Moreover, even within that 30% there is an inadequacy in the disclosure.The findings of the paper specify that the Sri Lankan financial institutions’ social disclosures could progress in this way to become more holistic and eventually (in association with the country’s central bank, CSE and other regulatory institutions) to come up with a type of arranged reporting to the point where they are appropriately branded as per the requirement.
The Impact of Capital Structure Choice on Firm Performance: Empirical Evidence from Diversified Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Abeyrathne, A.H.M.U.S.; Thilakerathne, P.M.C.
The Capital structure decision is fundamental for any business organization, because of the need to maximize return to the various stakeholders and such decision has great impact on the firms’ ability to deal with competitive environment (Awunyo-Vitor, 2012). Therefore managers need to take decision very carefully regarding to the capital structure of company. Hence the researcher investigated the impact of capital structure choice on firm performance. The objective of this research is to evaluate the impact of capital structure choice on performance of diversified companies in Sri Lanka. The study used secondary data for a sample of 14 listed diversified companies in Colombo stock exchange during 2008-2016.Short Term Debt to Asset Ratio and Long Term Debt to Assets Ratio used as measurements of capital structure. Further firm size used as control variable and also Net Profit Margin, Return on Equity and Return on Assets used as measurements of performance of the diversified companies. The results indicated that firm performance, which is measured by Return on Asset, Return on Equity and have negative relationship with Short Term Debt to Asset Ratio and there is no significant relation with Short Term Debt to Asset Ratio. Further Short Term Debt to Asset Ratio has a negative significant impact on Net Profit Margin. Moreover, Long Term Debt to Asset Ratio has a negative significant impact on Return on Asset and Return on Equity. Therefore, there is negative relationship between capital structure choice and performance of diversified companies in Sri Lanka.
Relationship between Corporate Social Responsibilities and Customer Purchase Intention in North-Western Province, Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Koshila, T.G.S.; Aruppala, W.D.N.
In the competitive business world, the organizations have found that it is very difficult to survive. For this purpose they use various strategies where Corporate Social Responsibility takes considerable place in this regard. The emergence principles of sustainable development have an important impact on the concept of Corporate Social Responsibility. This study considered about the impact of corporate social responsibility practices which are undertaken by the companies on the customers’ purchasing intentions. The data was collected from North-Western province, Sri Lanka. According to the literature findings, corporate social responsibility is identified under four variables which are economic responsibilities, legal responsibilities, ethical responsibilities and philanthropic responsibilities. Customer purchasing intention is considered under three variables, customer satisfaction, customer loyalty and customer trust. The sample was taken as the 400 of customers in North-Western province, Sri Lanka and data was collected via structured questionnaire. The study have identified that there is a moderate and positive effect of overall corporate social responsibility practices on overall customer purchase intentions. Finally suggestions were given to enhance the reliability of study through identifying limitations and suggestions will helpful for decision makers to gain competitive advantage over their rivals. Finally it has identified further research areas the study can be developed.
Effect of Working Capital Management on the Performance of Listed Food Beverage Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Silva, A.M.P.K.; Perera, H.A.P.L.
This study investigated the relationship between the efficient working capital management and the performance of Food & Beverage Companies in Sri Lanka. To achieve the objectives of the study, the researcher used secondary data of eighteen Food & Beverage Companies using annual reports published during the period 2009-2015. The dependent variable, return on asset is used as the measures for the Performance. The key independent variables used in the analysis are receivables, stocks, cash and payables. The SPSS & E-views were used to analyze the collected data by the researcher. According to the outputs generated through statistical packages there is a significant relationship between Credit Ratio & the Return on Asset, which is the measure of the profitability. Similarly, there is a significant relationship between Debt Collection period, Credit Payable Period, Cash Conversion Cycle and & the Return on Asset. In addition, the results showed that there is a significant negative relationship between ratio of debt collection period, Cash Conversion Cycle and profitability. As well as there is positive relationship between ratio of Creditor payable period, Current ratio and Profitability. The results also show that there is a significant relationship between working capital and return on assets of selected companies. It means that when the working capital decreases it will lead to increase profitability of the firms. Further it was recommended that the selected companies adequately plan and control their credit policy, day to day operations and outstanding by the level of managers with the discussions, board meetings, suggestions and proposals so as to achieve the profitability.
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.
The Relationship between Capital Structure and Firm Performance of Listed Manufacturing Firms in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Dilrukshi, B.W.D.; Thilakarathne, C.R.
This study investigates the relationship between capital structure and firm performance of listed manufacturing firms traded in Colombo Stock Exchange in Sri Lanka that will be important to decision makers of the firm’s to identify the optimum mix of debt and equity. The present study is proceed with the sample of 30 manufacturing listed firms out of 40 companies using the data represent the periods of 2010-2015. Firm performance is measured by using Return on Asset (ROA) whereas Debt Equity Ratio (DER), Debt Asset Ratio (DAR), Short Term Debt to Total Asset (STD/TA) and Long Term Debt Total Asset (LTD/TA) were used as measures of capital structure. Descriptive statistics, correlation and regression analysis were used to perform statistical tests. The data was collected by using from 2010-2015 annual reports. Results suggest that there is an insignificant negative relationship between DER and firm performance of firms, and a significant positive relationship between DER, STD/TA with financial performance measures.
Capital Structure and Firm Performance: Evidence from Listed Food and Beverage Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Rajapaksha, R.M.P.W.M.; Wijesinghe, K.D.G.N.
Capital structure refers to the percentage of money at work in a company. There are two forms of capital: equity capital and debt capital. The firm’s capability of accomplish the needs of its stakeholders is closely related to the firm’s Capital Structure decisions. Capital Structure decision is to find out the best mix of debts and equity that a company uses to finance its business. This analysis performs to identify the relationship between Capital Structure and performance of the food and beverage companies in Sri Lanka, The examination performs using 15 companies listed on the Colombo Stock Exchange covering the years 2010-2015. The review utilizes Return on assets as dependent variable as well as the three capital structure measure Short Term Debt to Total Assets, Long Term Debt to Total Assets & Total Debt To Equity as autonomous variable. Descriptive, Regression and correlation analysis use as a techniques for measure the variables. The outcome reveals a positive relationship between the Short-Term Debt to Total Assets and Return on Assets. However there is a negative relationship between the Long-Term Debt to Total Assets and Return on Assets. The relationship between Total Debt and Return on Assets show a positive association as these findings analysis discovered that there is significant relationship between capital structure and performance of the listed food and beverage industry in Sri Lanka. Furthermore increasing short term debt within an organization will lead to enhance the performance of the food and beverage industry in Sri Lanka nevertheless keeping more long term debt will lead to decrease the performance of the listed food and beverage industry in Sri Lanka.
Impact of Capital Structure on Performance of Listed Manufacturing Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Perera, M.A.K.C.; Wijesinghe, K.D.G.N.
This research investigates the impact of capital structure on performance of manufacturing companies’ listed Colombo stock exchange (CSE). Capital structure is the combination of debt and owners’ equity. Objective of this study is to find out relationship between capital structure and firm performance while searching factors which are significantly affect performance of listed manufacturing companies. This study uses panel data of 16 manufacturing sector companies listed in CSE for the period of 8 years (2009 to 2016). The researcher is use descriptive statistics, correlation and multiple regressions for analysis purpose. The researcher develops five models by considering five different performance measurements as dependent variable. Namely; Net profit ratio (NPR), Gross profit ratio (GPR), Return on asset (ROA), Return on equity (ROE) and Return on capital employed (ROCE). Further researcher is uses Debt to equity ratio (DTE), Debt to asset ratio (DTA), Long term debt ratio (LTDR) and Short term debt ratio (STDR) as explanatory variables for the study. Results reveals except long term debt ratio, other explanatory variables have negative relationship with firm performance and all five regression models accept long term debt ratio as significantly effects to firm performance.
The Impact of Credit Risk Management on the Performance of Banking Sector
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Abewardhana, N.A.K.M.A.; Thilakarathne, P.M.C.
The aim of this study was to analyze the impact of credit risk management on the performance of banking sector in Sri Lanka and to establish if there exists any relationship between the credit risk management and performance of commercial banks in Sri Lanka. A causal research design was undertaken in this study and this was facilitated by the use of secondary data which was obtained from the Bank’s Annual reports. The study used regression analysis to analysis the data and findings have been presented in the form of tables and regression equations. The study found that there is a significant relationship between the credit risk management and performance of the banking sector. Further the study investigated that non-performing loans have positive relationship with financial performance (ROA). The analysis found that NPL and ROE have negative relationship through regression analysis that mean a unit increase in NPL, decrease ROE by 1.4. CAR and ROE have negative relationship, it can be described coefficient value is -.526. This study concludes that the credit risk management and financial performance (ROA, ROE) have significant negative relationship. The study recommends that commercial banks should try to keep their nonperforming loan at optimal level because nonperforming loan has negative relationship with profitability. Managers get higher evaluation regarding customer have ability to pay back when borrowing. This analysis suggests these banks to establish credit risk management unit for implementing best risk management practices.
The Impact of Credit Risk Management on Performance of Commercial Banks
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Navoda, G.N.; Karunarathne, W.V.A.D.
Banking industry is one of the largest sector in current world, with branches and subsidiaries throughout everyone’s life. However, commercial banks are facing risks when they are operating. Credit risk is the one of the significant risk that banks face, considering that granting is one of the main source of income in commercial banks in Sri Lanka. There for the management of the risk related to that credit affect the Performance of the banks. The main purpose of the research is to investigate if there is a relationship between credit risk management and Performance of commercial banks in Sri Lanka. Research model, ROE and ROA are measurement tools of Performance and CAR, NPLR, LR and CIR are defined as tools of credit risk management. The population of this study is 24 commercial banks in Sri Lanka, and 11 commercial banks will be identified as the sample. The analyze has been made the credit risk management and its impact on profitability capacity during 2006 to 2015 (10 years) financial year of commercial banks in Sri Lanka. The research data will be collect from annual reports of sample banks. Correlation and multiple regression analysis are used for analysis. The findings reveal that positive relationship between credit risk management and performance. And also credit risk management is significant impact on performance of commercial banks in Sri Lanka.
Computerized Accounting System Usage of Small & Medium Scale Enterprises in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Weerasinghe, H.D.S.S.; Perera, H.A.P.L.
Most of the researches were found that, Small and Medium Enterprises (SMEs) play a significant role in almost all economies. For developing countries it is more critical than developed countries. As a developing country SMEs are identified as one of the most important elements in the economy by Sri Lankan government. Accounting system is a main component of an organization which determine the existence if the organization though evaluating the performance. In present most of the businesses are using Computerized Accounting System ot enhance the effectiveness and efficiency of accounting process. This research analyzed the Computerized Accounting System Usage by Small & Medium Scale Enterprises in Sri Lanka with reference to Colombo district. 100 SMEs were selected to obtain data and data collected through a questionnaire from SMEs in Colombo District. Out of the 100 samples selected 75 responses were received. The received data were analyzed using frequency analysis and cross tab analysis in descriptive statistics. It is found that majority of the SMEs are using computerized accounting systems but not the best software available in the market. Also there is a relationship in computerized accounting systems and the level of education of business owner and the accountant, number of accounting staff and the organizational structure. It is recommended to guide and carrying out trainings for SMEs by the government to adopt Computerized the SMEs with the technology and the boost the performance of the SMEs in Sri Lanka.
Working Capital Management and Its Impact on Profitability: A Study of Selected Listed Hotels and Travels Companies in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Priyadarshani, M.R.; Abeywardhana, D.K.Y.
The management of working capital can be defined as an accounting approach that emphasize on maintaining proper levels of both current assets and current liabilities. The management of working capital relates managing inventories, accounts receivable, accounts payable and cash. Working Capital Management (WCM) is a powerful element in any organization. For the reason behind that, the main working capital components such as Average Collection Period (ACP), Average Payable Period (APP), Inventory Conversion Period (ICP) and Cash Conversion Cycle (CCC) are directly impact to the firm’s performance. Consequently in this study also used these variables as the independent variables. Return on Assets (ROA) is used as a measure of profitability as well as dependent variable. Current Ratio (CR), Debt Ratio (DR), Firm Size (SIZE) and Sales Growth (GROWTH) are the control variables that used in present study to compute the WCM impact on profitability. This paper analyzes the WCM and its impact on profitability in Sri Lanka for the period of 2011 to 2015. The population consists with 38 hotel and travel companies listed in Sri Lankan Colombo Stock Exchange and the sample contains 20 companies of the above mentioned population. Pearson’s correlations and ordinary least square regression method were used to establish the relationship between WCM and firm’s profitability. This study finds that positive relationship between return on assets and ICP, CCC and CR. On the other hand present study suggests that there is a negative relationship between ROA and ACP, APP, DR, SIZE and GROWTH of firms. Among these variables, ICP and SIZE are highly significant to the profitability. Based on the key findings from this study it has been evident that managers can create a value for the enhancement of shareholder’s wealth by increasing the number of days inventory conversion to a maximum level and reducing the number of days accounts receivables and accounts payables to a reasonable level. This study recommend to the management in setting longer credit period policy for this sector to achieve higher profitability and they can maintain optimum high level of inventory in order to reduce the cost of possible breaks in the production process and loss of business due to the scarcity of inputs in production. Furthermore, firms can take short to pay their creditors in as much as they can build up strong relationships with these creditors. Also firm can get the sustainable competitive advantage by the effective and efficient utilization of the firm resources through the increment of the cash conversion cycle to its maximum. In so doing, the profitability of the firms is expected to increase.
Accountants’ Perception of Internal Control Problems Associated with the Use of Computerized Accounting Systems: Evidence from Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Wijesuriya, D.R.D.; Perera, H.A.P.L.
Today most of companies depend upon the computerized accounting systems and these systems have more complex in meeting information needs. Due to the enhancement of business complexity in recent decades, companies are facing internal control problems associated with the use of computers and computer related systems. The main purpose of this study is to examine the accountants’ perception of internal control problems associated with the use of computerized accounting systems exist. For this study, the main instrument of data collection was the questionnaire. Data is collected from 84 accountants in selected companies covering different types of industries and Descriptive statistics such as frequency distributions, percentage distribution of responses, means, cross tabulation and ANOVA were used to analyze the data. The results indicate that there are internal control problems exist with the use of computerized accounting system in Sri Lankan companies. The major important problems are Unfamiliar user may enter incorrect data, Great potential for error by employees as a result of insufficient knowledge about the system ,Great speed of computers can be manipulated to the advantage of users, New sources and potential for errors are likely to arise in the: Hardware and software, Duties are concentrated within the computer (i.e. no separation of duties as in the manual system), Information can be changed without physical traces, concentrated information is easy to steal and Electronic information is easy to lose, Employees, customers and other users trust the computer output .However, they perceive that certain control procedures can be undertaken to overcome them such as authorized access to computers, Proper system design, Use physical controls and proper authorization, Use backup copies, only authorized people should have access to the records, Use physical control and cross-check and Use control totals to check computer results .It was found that the problems in the storage level are most frequently occurred internal control issues.
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).
Impact of Working Capital Management on Profitability of Manufacturing Sector Small and Medium Sized Enterprises (SMEs) in Sri Lanka
(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Bandara, A.W.D.Y.; Thilakarathne, P.M.C.
Working Capital Management (WCM) is the management of short-term financing requirements of companies. WCM impacts on both profitability and liquidity of the companies. This study aims to investigate the impact of working capital management on profitability of manufacturing sector small and medium sized enterprises in Sri Lanka. This study makes use of twenty manufacturing sector small and medium enterprises in Sri Lanka for the period from 2010 to 2015. Study used secondary data, data were collected from selected companies audited financial statements of relevant years. Multiple regression model was used to investigate the relationship between working capital management and companies’ profitability. The working capital was measured by cash conversion cycle (CCC), average number of day-sales of inventories (INV), average number of day-sales accounts receivable (AR) and average number of accounts payable (AP) as independent variables and the profitability was determined by return on assets (ROA) as dependent variable. Finally, researcher finds that the positive relationship between CCC and AP with ROA and AR is negatively related with ROA. So, the CCC, AR and AP are significant factors to determine the impact profitability of manufacturing small and medium sized enterprises in Sri Lanka. The INV is not a significant factor. Therefore, INV does not impact on profitability of manufacturing small and medium sized enterprises in Sri Lanka.