Impact of Cash Conversion Cycle on Profitability. An Empirical Study on the Listed Hotel Companies in Sri Lanka
Cash conversion cycle (CCC) is one of the most widely used measurements to evaluate the risks and returns associated with liquidity management. Each company is highly concerned with how profitability can be maintained and strengthened, so they have to keep an eye on the factors that influence profit...
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| Format: | Article |
| Language: | English |
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The Body of Expert and Licensed Accountants of Romania
2023-10-01
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| Series: | CECCAR Business Review |
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https://www.ceccarbusinessreview.ro/impact-of-cash-conversion-cycle-on-profitability-an-empirical-study-on-the-listed-hotel-companies-in-sri-lanka-a335d/download-PDF/
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| author | L.M.I.M. LEWLIYADDA T.T. SUBASINGHE |
| author_facet | L.M.I.M. LEWLIYADDA T.T. SUBASINGHE |
| author_sort | L.M.I.M. LEWLIYADDA |
| collection | DOAJ |
| description | Cash conversion cycle (CCC) is one of the most widely used measurements to evaluate the risks and returns associated with liquidity management. Each company is highly concerned with how profitability can be maintained and strengthened, so they have to keep an eye on the factors that influence profitability. Therefore, the main purpose of this study is to identify the impact of cash conversion cycle on profitability of selected listed hotel companies in Colombo Stock Exchange (CSE), Sri Lanka. The present study is concerned about evaluating how CCC affects the profitability of listed hotel companies within the consumer service sector in CSE. In terms, profitability was calculated using return on assets (ROA) and return on equity (ROE). CCC measured using the inventory turnover period (ITP), receivable turnover period (RTP) and payable turnover period (PTP). The sample covered the 30 listed hotel companies and took the period as twelve years starting from 2011/12 to 2022/23. In this study, regression and correlation statistical techniques were used to estimate the impact and the relationship between CCC and profitability. According to regression analysis, ITP has a negative relationship with ROA and a positive relationship with ROE. Further, the study found that PTP and RTP are negatively affected by ROA and ROE. The study reveals that CCC positively correlated with profitability and has a significant impact on profitability. There was a significant impact of CCC on profitability in listed hotel companies of the consumer service sector in CSE. These results of the study suggest and recommend that managers can create value for their shareholders by maintaining effective and efficient CCC. |
| first_indexed | 2024-03-11T14:27:58Z |
| format | Article |
| id | doaj.art-2d7131021c3a423b897583bf2dd81867 |
| institution | Directory Open Access Journal |
| issn | 2668-8921 |
| language | English |
| last_indexed | 2024-03-11T14:27:58Z |
| publishDate | 2023-10-01 |
| publisher | The Body of Expert and Licensed Accountants of Romania |
| record_format | Article |
| series | CECCAR Business Review |
| spelling | doaj.art-2d7131021c3a423b897583bf2dd818672023-10-31T11:58:48ZengThe Body of Expert and Licensed Accountants of RomaniaCECCAR Business Review2668-89212023-10-0149415510.37945/cbr.2023.09.0526688921Impact of Cash Conversion Cycle on Profitability. An Empirical Study on the Listed Hotel Companies in Sri LankaL.M.I.M. LEWLIYADDA0T.T. SUBASINGHE1Uva Wellassa University, Badulla, Sri LankaUva Wellassa University, Badulla, Sri LankaCash conversion cycle (CCC) is one of the most widely used measurements to evaluate the risks and returns associated with liquidity management. Each company is highly concerned with how profitability can be maintained and strengthened, so they have to keep an eye on the factors that influence profitability. Therefore, the main purpose of this study is to identify the impact of cash conversion cycle on profitability of selected listed hotel companies in Colombo Stock Exchange (CSE), Sri Lanka. The present study is concerned about evaluating how CCC affects the profitability of listed hotel companies within the consumer service sector in CSE. In terms, profitability was calculated using return on assets (ROA) and return on equity (ROE). CCC measured using the inventory turnover period (ITP), receivable turnover period (RTP) and payable turnover period (PTP). The sample covered the 30 listed hotel companies and took the period as twelve years starting from 2011/12 to 2022/23. In this study, regression and correlation statistical techniques were used to estimate the impact and the relationship between CCC and profitability. According to regression analysis, ITP has a negative relationship with ROA and a positive relationship with ROE. Further, the study found that PTP and RTP are negatively affected by ROA and ROE. The study reveals that CCC positively correlated with profitability and has a significant impact on profitability. There was a significant impact of CCC on profitability in listed hotel companies of the consumer service sector in CSE. These results of the study suggest and recommend that managers can create value for their shareholders by maintaining effective and efficient CCC. https://www.ceccarbusinessreview.ro/impact-of-cash-conversion-cycle-on-profitability-an-empirical-study-on-the-listed-hotel-companies-in-sri-lanka-a335d/download-PDF/ cash conversion cyclereturn on assetsreturn on equitylisted hotel companiesworking capital managementprofitability |
| spellingShingle | L.M.I.M. LEWLIYADDA T.T. SUBASINGHE Impact of Cash Conversion Cycle on Profitability. An Empirical Study on the Listed Hotel Companies in Sri Lanka CECCAR Business Review cash conversion cycle return on assets return on equity listed hotel companies working capital management profitability |
| title | Impact of Cash Conversion Cycle on Profitability. An Empirical Study on the Listed Hotel Companies in Sri Lanka |
| title_full | Impact of Cash Conversion Cycle on Profitability. An Empirical Study on the Listed Hotel Companies in Sri Lanka |
| title_fullStr | Impact of Cash Conversion Cycle on Profitability. An Empirical Study on the Listed Hotel Companies in Sri Lanka |
| title_full_unstemmed | Impact of Cash Conversion Cycle on Profitability. An Empirical Study on the Listed Hotel Companies in Sri Lanka |
| title_short | Impact of Cash Conversion Cycle on Profitability. An Empirical Study on the Listed Hotel Companies in Sri Lanka |
| title_sort | impact of cash conversion cycle on profitability an empirical study on the listed hotel companies in sri lanka |
| topic | cash conversion cycle return on assets return on equity listed hotel companies working capital management profitability |
| url |
https://www.ceccarbusinessreview.ro/impact-of-cash-conversion-cycle-on-profitability-an-empirical-study-on-the-listed-hotel-companies-in-sri-lanka-a335d/download-PDF/
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