THE IMPACT OF FINANCIAL DECISIONS ON FINANCIAL PERFORMANCE OF LISTED MATERIAL COMPANIES IN SRI LANKA

Abstract

Financial decisions are deemed to be a key component in today's fiercely competitive business environment to enhance the company's financial success. Hence, this study investigates the impact of financial decisions on financial performance of listed material companies in Sri Lanka. Leverage decisions, working capital decisions, dividend decisions and investment decisions were considered as financial decisions variables and financial performance was measured using return on assets (ROA). Data were collected from published financial statements of 20 listed material companies in Sri Lanka from 2017 to 2021 using simple random sampling method. Data were analyzed using regression analysis. Correlation analysis confirmed that all independent variables are positively correlated with financial performance of listed material companies in Sri Lanka. Moreover, the regression results and findings revealed that there is negative insignificant impact between leverage decisions, working capital decisions, and investment decisions on financial performance. And also, there is positive significant impact between dividend decisions on financial performance of listed material companies in Sri Lanka. The study therefore recommended that there is a need for well-developed financial planning in material companies to enhance their performance. The findings of the study hold practical implications for policy makers, owners, managers and investors.