Abstract:
The performance of hotel industry is most important to the wealthy of the Sri
Lankan economy. Hotels compete in a global economy with infinite
opportunities. Hence, hotels need more financial strength in order to run the
day to day operations of the business. Capital Structure is one of the main
criteria which concerned in financial strength of the hotels. The capital
structure of listed companies is most important dimension that every
stakeholder is very much concerned. The objective of this study is to identify
the relationship between capital structure and performance in the listed hotels
in Sri Lanka. Furthermore, this study also aims to indicate what is the most
influential factor for capital structure? Short term debt, Long term debt and
debt to equity ratio are used as measurement of capital structure. Performance
of hotel was dependent variable and it measured by ROA. The study has been
used panel data procedure for a sample of 26Sri Lankan hotels listed in
Colombo Stock Exchange during 2010-2015.The data for all the variables in
the study were abstracted from audited annual reportsThis quantitative
analysis used descriptive statistic, regression analysis and correlation analysis
to demonstrate relationship between capital structure and performance. This
study found that a significant positive relationship between capital structure
and performance of hotels listed in CSE. Based on findings, it can be arrived
to an overall conclusion that an appropriate mix of capital structure improves
the performance of hotels.
