Commerce and Management

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    The effects of working capital management on profitability, liquidity, solvency and organic growth with special reference to SMEs: A review.
    (International Journal of Accounting & Business Finance, 2017) Semasinghe, D.M.; Mahasena, Senanayake; Dayaratna Banda, O.G.
    A well designed and implemented working capital management is expected to contribute positively to the creation of a firm's value and ultimately to its organic growth extent. The purpose of this paper is to review the trends in working capital management and its impact on firms' performance and organic growth as experienced in previous studies. The theoretical underpinnings have also been evaluated and recorded as preliminary comments. The examination of literature has been categorized, so as to consider micro aspects of: definitions, nature, generics of working capital management and the key contributions of profitability, liquidity, solvency leading to organic growth. On a macro footing the impact of small and medium enterprise on national development in Sri Lanka and hence the need for a differentiated approach has been examined. A strong significant relationship between working capital management and profitability, liquidity, solvency and financial health has been found in previous empirical work. A case in point would be to determine by further research the extent of presence of these value drivers and determine the extent to which they champion, the cause of value enhancement amidst an increasing trend in the short-term component of working capital financing as reflected in their respective 'financial architectures'. Adoption of 'cutting edge' strategies and tactics in relation to working capital management practice seems to be a need for most SMEs in Sri Lanka.
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    Capital Structure and Profitability: An Empirical Analysis of SMEs in the UK
    (2015) Abeywardhana, D.K.Y.
    This study examines the relationship between capital structure and the profitability of non- financial SMEs in the UK for the period of 1998-2008. Using the Two Stage Least Squares, (2SLS) the results show a significant relationship with capital structure and profitability which is negatively related. The size of the firm appears a more important factor that determines the profitability in SMEs in the UK. There is consistent evidence for positive size- profitability relationship. The results of this study have shown that the capital structure of the firm has a significant influence on the profitability of SMEs in the UK. Especially, long-term debt to total assets ratio is negatively related with the profitability and this is an indication that SMEs are averse to use more equity because of the fear of losing the control.