Impact of Inventory Conversion Period on Firm Profitability and Capital Intensity of Listed Construction Firms in Sri Lanka

The study is aimed to examine the impact of inventory conversion period on firm profitability and capital intensity of listed construction firms in Sri Lanka. The study considered firm profitability as the dependent variable which is measured by Gross Profit (GP) and inventory Conversion Period (ICP) as the independent variable. Moreover, study also scrutinize Current Ratio(CR) and Debt Ratio (DR) as control variable. The study examined all construction firms listed on CSE over the period of five years from 2010 to 2014. The required data and information for the study were gathered from published annual reports and website of listed companies in CSE. Correlation and regression analysis were used to find out the relationship and state the impact between the variables. Analyzed results suggest there is a significant negative relationship between ICP and GP. Further, GOP has a positive relationship with debt ratio and current ratio. The efficiency in managing the above variables helps in increasing the profitability and capital intensity of the construction firm