Commerce and Management
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Item A Survey on Capital Budgeting Techniques Practiced by the Sri Lankan Commercial Sector(Faculty of Commerce and Management Studies, University of Kelaniya, 2015) Ranaweera, A.L.; Fernado, C.S.P.K.; Rajini, P.A.D.; Weerasinghe, R.P.N.P.Capital Budgeting (CB) is one of the most important areas of firms’ decision making process that contributes to long term growth of the firm. Various Capital Budgeting Techniques (CBTs) are being widely used among financial expertise. Several techniques are commonly used to evaluate capital budgeting projects such as Discounted Cash Flow techniques such as Net Present Value (NPV), Internal Rate of Return (IRR) and Profitability Index (PI)) and Non-Discounted Cash Flow techniques such as Payback Period (PP) and Accounting Rate of Return (ARR)). Recent studies highlighted that financial managers favor methods such as the NPV, IRR or PP techniques (Lawrence, et al., 1997). The use of techniques is varying with different factors including organizations, managers, and size of the project. This study particularly finds the Capital Budgeting Techniques (CBT) practiced in Sri Lankan commercial sector organizations. A semi-structured questionnaire survey was conducted to gather empirical findings with the selected sample. It was found that majority of the firms are using NPV as a primary CBT while the second is given to PP and IRR respectively. Some firms adopt more than one technique to be a primary tool and it was highlighted that NPV and IRR as the most commonly used combination in project evolutions. The study found that majority of the firms adopts Weighted Average Cost of Capital (WACC) as an independent measure of cost of capital. It was revealed there is a high tendency towards adopting CBTs to evaluate the projects in Sri Lankan commercial sector.Item Determinants of Cross-Company Differences in Capital Structures in Sri Lankan Hotel Industry: An Opinion Survey(2011) Fernando, C.S.P.; Rajini, P.A.D.; Reha, R.The capital structure is the composition of a company?s sources of funds, which is determined by the proportion of the debt-equity mix. Determination of capital structure of a firm is very important because it affects cost of capital. Firm?s capital structure is one of the most widely researched topics in corporate finance world. However, in the Sri Lankan context, only a few researches have been carried out on capital structure in service industry and hardly any in the hotel industry. Therefore, a need has been identified to find out the factors that determine capital structure of hotel industry. Hence, this research examines the effect of different company specific variables including liquidity, information asymmetry, agency cost, dividends, profitability, business risk, growth rate and bankruptcy costs on the capital structure of the Sri Lankan hotels. In achieving the aim of this research, an empirical investigation was conducted using survey questionnaires. In order to identify the overall explanatory power of variables, a multiple regression analysis was carried out and a simple linear regression was conducted to ascertain individual contributions of the determinants in explaining cross firm capital structure differences. The results revealed that the business risk variable is the only determinant that has a significant influence on proportion of debt in the capital structure.