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A Study on Relationship between Working Capital Management and Firms’ Performance: Comparison between Manufacturing Sector and Food & Beverage Sector in Colombo Stock Exchange

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dc.contributor.author Karunarathne, R.M.H.L.
dc.contributor.author Karunarathne, W.V.A.D.
dc.date.accessioned 2017-02-20T06:40:14Z
dc.date.available 2017-02-20T06:40:14Z
dc.date.issued 2016
dc.identifier.citation Karunarathne, R.M.H.L. and Karunarathne, W.V.A.D. 2016. A Study on Relationship between Working Capital Management and Firms’ Performance: Comparison between Manufacturing Sector and Food & Beverage Sector in Colombo Stock Exchange. In Proceedings of the Undergraduates Research Conference - 2016, 11th January 2017, Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka. en_US
dc.identifier.issn 2550- 2611
dc.identifier.uri http://repository.kln.ac.lk/handle/123456789/16493
dc.description.abstract This study examines the relationship between working capital management (WCM) on firms’ performance and also compare the correlation results in between manufacturing sector and the food and beverage sector firms in Sri Lanka. The goal of WCM is to ensure that the firm is able to continue its operations and that it has adequate cash flows to satisfy both maturing shortterm debt and upcoming operational expenses at minimal costs, and consequently, increasing corporate profitability (Angahar & Alematu, 2014). Though empirical evidence exists on the topic, yet there is an uncertainty in determining the optimum level of WCM, especially in Sri Lankan context. Since WCM may be different from industry to industry, firms have to adopt an appropriate WCM approach which is favorable to particular industrial sector. Hence this study compare the relationship between WCM and the firm’s performance of eighteen manufacturing firms and eighteen food & beverage firms listed in the CSE. Data were gathered from annual reports of the sampled firms for the period 2011-2015. The WCM measured in terms of Inventory Turn-over Days (ITD), Average Receivable Days (ARD), Average Payable Days (APD), Cash Conversion Cycle (CCC) and Sales Growth Rate (SGR) whereas performance was measured by the return on assets (ROA). According to the data analysis, there was a negative correlation between ROA and CCC, ITD, ARD. In addition to that, there was a positive correlation between APD and SGR with ROA. There was a significant relationship between WCM and firms’ performance in manufacturing and food & beverage sector. Keeping an optimal level of liquidity of the manufacturing and food & beverage sector and the value of the managers of companies in the manufacturing and food & beverage sector will have to increase the value of the firm thereby controlling the level of optimal working capital position. en_US
dc.language.iso en en_US
dc.publisher Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka en_US
dc.subject Cash Conversion Cycle en_US
dc.subject Working Capital Management en_US
dc.subject Performance en_US
dc.title A Study on Relationship between Working Capital Management and Firms’ Performance: Comparison between Manufacturing Sector and Food & Beverage Sector in Colombo Stock Exchange en_US
dc.type Article en_US


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