Commerce and Management
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Item The Impact of Working Capital Management on Profitability in Listed Manufacturing Companies in Sri Lanka(Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Bandara, A.B.M.M.H.; Thilakarathne, P.M.C.Working Capital Management has its influence on liquidity as same the profitability. Several studies (Deloof, M., 2003., Raheman A and M Nasr, 2007.),given emphasizing the importance of the short-term finance in firms. The purpose of this research is investigates the impact of working capital management on profitability of manufacturing companies in Sri Lank? The trend in working capital needs and its implication to profitability of firms are examined to identify the causes for any significant differences desirable among the industries. Hence the present study was used regression analysis to examine the hypotheses frame worked for the period of seven years from 2010-2016 with the total 182 observations and data collected from annual financial statements. Working capital management were measured using inventory period, trade receivable, trade payable, cash conversion cycle and current ratio. Return on assets applied to measures of profitability Found of this study showed a positive significant relationship between inventory turnover period, trade receivable period, and significant negative relationship with ROA. These findings of the study can be used cash conversion cycle enhancing it will lead to reducing profitability of the firm, and managers supports to create a positive value for the shareholders by reducing the cash conversion cycle to a possible minimum level. The study also finds a significant negative relationship between accounts payable and profitability which is consistent with the view that less profitable firms delay long time to pay their bills.Item The relationship between working capital management and profitability of business(Department of Accountancy, University of Kelaniya, 2015) Bandara, A.B.M.M.H.The working capital management is important because of its effects on the firm’s profitability and risk, and consequently its value. Specifically, working capital investment involves a tradeoff between profitability and risk. Working capital management is direct impact on liquidity and profitability, in attention to the liquidity management process may cause severe difficulties and losses due to adverse short-run developments even for a firm with favorable long-run prospects. The purpose of this research is to provide empirical evidence on the effects of working capital management on the profitability of listed companies of the manufacturing sector in Sri Lanka. Working Capital Management has its effect on liquidity as well on profitability of the firm. In this research, I have selected the Sri Lankan manufacturing firms which are listed in the Colombo stock exchange for a period of 5 years from 2009 – 2014. Data collection will be mainly based on secondary evidence methods including annual reports and financial statements and, previous financial statements. This study uses the effect of different variables of working capital management including the Average collection period, Inventory turnover in days, Average payment period and cash conversion cycle from operating activities, total current assets and total current liabilities on the Net operating profitability of having Sri Lankan manufacturing firms. Empirical evidence relating working capital management and profitability in general supports the fact that aggressive working capital policies enhance profitability. This suggests that reducing working capital investment is likely to lead to higher profits.