Abstract:
Credit management is a very important activity of any organization and it will be the
reason to increase firm’s revenue and ultimately firm’s profitability. The purpose of
this study is to identify the impact of credit management on profitability of listed
companies in Sri Lanka. The sample of the current study was only the manufacturing
sector companies listed in Colombo Stock Exchange in Sri Lanka for the period of
2011 to 2017. Due to the unavailability of data, only 30 listed manufacturing
companies were selected for the data analysis. The researcher used Debtor’s turnover
ratio, Account receivable ratio and Liquidity management as independent variables
to measure the credit management and Return on Assets (ROA) is used as dependent
variable to measure the company’s profitability. Panel data regression was used to
analyze data using E-views software. According to the results, Debtor’s turnover
ratio, Account receivable ratio and Liquidity management are affected for the
profitability of listed manufacturing companies in Sri Lanka. This study establishes
that there is a positive relationship between credit management policies and
company’s Return on Assets in listed companies of Sri Lanka
