Cash Position and Profitability of Telecommunication Sector in Srilanka
Greener Journal of Social Sciences, Vol. 3 (6), pp. 324-333, July 2013
11 Pages Posted: 24 Jan 2014
Date Written: July 2013
This study has analyzed cash position and profitability among listed telecommunication firms in Sri Lanka over a period from 2005 - 2011. The objective of the study was to establish the causality that exists between the profitability and cash position. This was prompted by the need to unravel the mystery on whether profits are driven by cash position or the vice versa. The study was carried out by analyzing the two firms’ profit measured by return on assets and return on equity as the dependent variable and the cash position as liquidity measure in relation to the sales, total assets and current liabilities as the independent variables. Pearson correlation analysis was used to find out the relationships between these variables and regression analysis was used to find out the impact of cash position on profitability. SPSS was utilized to support the analysis and to provide a basis for the conclusions drawn. Based on the descriptive analysis, there is no big fluctuation in the cash position ratios, return on equity and return on assets among Dialog telecom plc and Sri Lanka telecom plc. Based on the correlation analysis, there is a significant relationship between cash position ratios and return on equity & assets in the Sri Lanka telecom plc. In contrast; there is no significant relationship between cash position ratios and return on equity & assets in the Dialog telecom plc in the Sri Lankan context. Further, Sri Lanka telecom plc, cash position ratios have the influence or impact on the profitability measures comparing with Dialog telecom plc in the Sri Lankan context.
Keywords: Cash position, Profitability.
JEL Classification: M41
Suggested Citation: Suggested Citation