IMPACT OF MANAGEMENT ACCOUNTING APPLICATION OI{ THE F'INANCIAL PERFORMANCE OF SELECTED LISTED COMPANIES IN SRI LANKA

Abstract

Management accounting provides companies with the best opportunity to succeed in the market in order to provide customers with the best quality goods and services at reasonable prices. The general objective of this study was to investigate the impact of management accounting application on financial performance of selected listed companies in Sri Lanka. This study adopted a descriptive survey design. The target population for this study was the 286 listed companies in Sri Lanka. In order to come up with the sample size, the stratified random sampling approach was used because the population in various listed companies was considered heterogeneous, reflecting that a simple random sample is unrepresentative. The study therefore involved 164 listed companies in Sri Lanka. The study collected primary data from the respondents and secondary data from the annual reports. The data collected was both quantitative and qualitative. Analysis was done using Statistical Package for Social Sciences (SPSS), allowing the researcher to present the information in form of tables and figures. The study concludes that information for decision making is the most highly used management accounting practice amongst the listed companies in Sri Lanka, followed by strategic analysis, performance evaluation, budgeting and costing respectively. The study identifies key factors that influence performance and risky areas that require improvements on return on equity, ROE Q.{et income I Average Equity) has increased as a result of application of management accounting practices. This study recommends the creation and enhancement of awareness among firms of the importance of strategic analysis as it has the highest influence for the increase in financial performance amongst the listed companies ir1 Sri Lanka.