Commerce and Management

Permanent URI for this communityhttp://repository.kln.ac.lk/handle/123456789/140

Browse

Subject: search.filters.subject.Cash conversion cycle

Search Results

Now showing 1 - 3 of 3
  • Thumbnail Image
    Item
    Impact of Working Capital Management on Firm Performance: Comparative Analysis between Listed Manufacturing & Plantation Companies in Sri Lanka
    (Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka, 2016) Shanka, G.K.C.N.; Abeywardhana, D.K.Y.
    This study examines the relationship between the Working Capital Management (WCM) and the firms’ performance. This research uses data from 2010 to 2016 and examine two sectors (manufacturing and plantations) listed in Colombo Stock Exchange (CSE). Ordinary least squares regression and fixed effect model have been used to estimate the relationship between variables. The results showed that different sector may give different results in determining the relationship between the working capital and the firms’ performance. The study finds a negative relationship between profitability and number of day’s receivable in both manufacturing and plantation sectors. And negative relationship between number of day’s inventory holding of manufacturing firms, but positive relationship between profitability and no of day’s inventory holding in plantation sector firms, but a positive relationship between profitability and number of days accounts payable settlement in manufacturing companies. However Plantation Company’s result shows negative relationship between No of days payables settlements with profitability. The present study reveals that shortening of the cash conversion cycle negatively affects the profitability of Sir Lankan manufacturing companies but negatively affect the profitability of Sri Lankan plantation companies. Current ratio used as a variable shows positive relationship with profitability of plantation companies and negative relationship with the profitability of the manufacturing companies in Sri Lanka. Results can be strengthened if the firms manage their working capital in more efficient way it will ultimately increase profitability of these companies.
  • Thumbnail Image
    Item
    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.
  • No Thumbnail Available
    Item
    DETERMINING WORKING CAPITAL SOLVENCY LEVEL AND ITS EFFECT ON PROFITABILITY IN SELECTED INDIAN MANUFACTURING FIRMS
    (2010) Singh, K.; Asress, F.C.
    A well designed and implemented working capital management has a significant contribution for firms? profitability as well as to maintain liquidity powers. The purpose of this study is to assess working capital adequacy and its impact on profitability; to investigate the relationship between profitability and liquidity of firms. Natural logarithm of total current liabilities and Relative Solvency Ratio (RSR) are taken as dependent variables to measure the required size of current liabilities and firm?s solvency level respectively. Independent variables are sales, return on assets, current ratio, and cash conversion cycles. These are included in the panel data regression to assess for 250 firms for the period of 10 years. The regression result indicated that sales and cash conversion cycle have highly positive significant effect to determine required current liabilities (short term debt) whereas return on assets and current ratio have highly negative significant effect to determine required current liabilities. The result of negative association between profitability and liquidity is statistically insignificant. With the help of student t-test, the study also revealed that firms with adequate working capital achieved better performance than those firms which have less working capital in related to their operational sizes. Therefore, the null hypothesis that there is no difference between firms which have adequate working capital and less working capital in relation to their operational size on profitability is rejected as the p value is less than 0.05.