IDEAS home Printed from https://ideas.repec.org/a/aii/ijcmss/v2y2011i6p49-55.html
   My bibliography  Save this article

Value Added, Productivity and Performance of few selected Companies in Sri Lanka

Author

Listed:
  • T. Velnampy

    (Head/Accounting, Faculty of Management Studies & Commerce, University of Jaffna, Sri Lanka)

Abstract

Productivity is a measure of the rate at which inputs are transformed in to output. Hence productivity provides the technical relationship that exists between inputs and outputs. Productivity is actually looking at the more general issue of performance. Performance covers both overall economic and operational aspects. It can be described as the success of a company and its activities. So that value added, productivity and performance are closely inter connected. This paper attempt to measure the productivity of the 15 financial companies listed under the CSE using value added ratios such as (i) sales per employee ratio, (ii) labour cost to value added ratio, (iii) profit before tax to employee ratio, (iv) labour cost to sales ratio, and (vi) value added to employee ratio and to measure the performance with the ratios of (i) gross profit ratio,(ii) value added per rupee of fixed asset, (iii) return on capital employed, and (iv) net profit ratio using data representing the period of 2005-2009. The study finds that profit before tax per employee and value added per rupee of fixed asset (VAFA) is positively correlated and labour cost to sales (LS) and gross profit (GP) is also positively correlated. Further the labour cost to value added (LVA) is correlated with gross profit (GP) and value added per rupee of fixed asset and no relationship between the rest of the productivity and performance measures. R2 value of 0.471, 0.315, 0.198 and 0.887 (In all for models) which are in the models denote that 47.1%, 31.5%, 19.8%, and 88.7% of the observed variability in GP, NP, ROCE, and VAFA respectively in all the independent variables such as SE,VE,PE,LS, and LVA. Remaining 52.9%, 68.5%, 80.2% and 11.3% of the variance in GP, NP, ROCE, and VAFA related to other variables which are not explained, because they are not depicted in the models.

Suggested Citation

  • T. Velnampy, 2011. "Value Added, Productivity and Performance of few selected Companies in Sri Lanka," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 2(6), pages 49-55, September.
    • Handle: RePEc:aii:ijcmss:v:2:y:2011:i:6:p:49-55
    as

    Download full text from publisher

    File URL: http://scholarshub.net/index.php/ijcms/article/view/477/466
    Download Restriction: no
    File URL: http://scholarshub.net/index.php/ijcms/article/view/477
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hajime Sato, 2005. "‘Total factor productivity vs. realism’ revisited: the case of the South Korean steel industry," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 29(4), pages 635-655, July.
    2. Martin Neil Baily & Hans Gersbach, 1995. "Efficiency in Manufacturing and the Need for Global Competition," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1995 Micr), pages 307-358.
    3. Edward K.Y. Chen, 1997. "The Total Factor Productivity Debate: Determinants of Economic Growth in East Asia," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 11(1), pages 18-38, May.
    4. Marvin B. Lieberman & Lawrence J. Lau & Mark D. Williams, 1990. "Firm-Level Productivity and Management Influence: A Comparison of U.S. and Japanese Automobile Producers," Management Science, INFORMS, vol. 36(10), pages 1193-1215, October.
    5. Jesus Felipe, 1999. "Total factor productivity growth in East Asia: A critical survey," Journal of Development Studies, Taylor & Francis Journals, vol. 35(4), pages 1-41.
    6. Diewert, W E, 1992. "The Measurement of Productivity," Bulletin of Economic Research, Wiley Blackwell, vol. 44(3), pages 163-198, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marvin Lieberman & Jina Kang, 2008. "How to measure company productivity using value-added: A focus on Pohang Steel (POSCO)," Asia Pacific Journal of Management, Springer, vol. 25(2), pages 209-224, June.
    2. Cororaton, Caesar B. & Cuenca, Janet S., 2001. "Estimates of Total Factor Productivity in the Philippines," Discussion Papers DP 2001-02, Philippine Institute for Development Studies.
    3. Jinkai Li & Jueying Chen & Heguang Liu, 2021. "Sustainable Agricultural Total Factor Productivity and Its Spatial Relationship with Urbanization in China," Sustainability, MDPI, vol. 13(12), pages 1-15, June.
    4. van der Eng, Pierre, 2010. "The sources of long-term economic growth in Indonesia, 1880-2008," Explorations in Economic History, Elsevier, vol. 47(3), pages 294-309, July.
    5. Timmer, Marcel P., 1999. "Climbing the Technology Ladder Too Fast? An International Comparison of Productivity in South and East- Asian Manufacturing, 1963-1993," Working Papers 99.2, Eindhoven Center for Innovation Studies.
    6. Pierre van der Eng, 2008. "The sources of long-term economic growth in Indonesia, 1880-2007," ANU Working Papers in Economics and Econometrics 2008-499, Australian National University, College of Business and Economics, School of Economics.
    7. Nursel AYDINER‐AVSAR & ÖZlem ONARAN, 2010. "The Determinants Of Employment: A Sectoral Analysis For Turkey," The Developing Economies, Institute of Developing Economies, vol. 48(2), pages 203-231, June.
    8. Patalinghug, Epictetus, 2000. "A Review of the Components of the Medium-Term National Action Agenda for Productivity: An Integrative Report," Discussion Papers DP 2000-25, Philippine Institute for Development Studies.
    9. Chia-Hung Sun, 2005. "Productivity growth in East Asian manufacturing: a fading miracle or measurement problem?," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(1), pages 1-19.
    10. repec:dgr:rugccs:199919 is not listed on IDEAS
    11. Barnett, William A. & Erwin Diewert, W. & Zellner, Arnold, 2011. "Introduction to measurement with theory," Journal of Econometrics, Elsevier, vol. 161(1), pages 1-5, March.
    12. Liliana Meza-González & Jaime Marie Sepulveda, 2019. "The impact of competition with China in the US market on innovation in Mexican manufacturing firms," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 28(1), pages 1-21, December.
    13. René Belderbos & Jianglei Zou, 2006. "Foreign Investment, Divestment and Relocation by Japanese Electronics Firms in East Asia," Asian Economic Journal, East Asian Economic Association, vol. 20(1), pages 1-27, March.
    14. Paul Seabright, 2005. "National and European Champions - Burden or Blessing?," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 6(02), pages 52-55, August.
    15. Zaim, Osman & Uygurtürk Gazel, Tuğçe & Akkemik, K. Ali, 2017. "Measuring energy intensity in Japan: A new method," European Journal of Operational Research, Elsevier, vol. 258(2), pages 778-789.
    16. Nick Zubanov & W.S. Siebert, 2009. "Management economics in a large UK retailer," CPB Discussion Paper 125, CPB Netherlands Bureau for Economic Policy Analysis.
    17. Alberto BUCCI, 2004. "Economic growth in an enlarged Europe: the human capital and R&D dimensions," Departmental Working Papers 2004-22, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    18. Sabiroglu, Ilkin M. & Bashirli, Samad, 2012. "Input–output analysis in an oil-rich economy: The case of Azerbaijan," Resources Policy, Elsevier, vol. 37(1), pages 73-80.
    19. Managi, Shunsuke & Opaluch, James J. & Jin, Di & Grigalunas, Thomas A., 2006. "Stochastic frontier analysis of total factor productivity in the offshore oil and gas industry," Ecological Economics, Elsevier, vol. 60(1), pages 204-215, November.
    20. Kao, Chiang & Chen, Liang-Hsuan & Wang, Tai-Yue & Kuo, Shyanjaw & Horng, Shi-Dai, 1995. "Productivity improvement: Efficiency approach vs effectiveness approach," Omega, Elsevier, vol. 23(2), pages 197-204, April.
    21. W. Bruce Traill & Matthew Meulenberg, 2001. "Innovation in the food industry," Agribusiness, John Wiley & Sons, Ltd., vol. 18(1), pages 1-21.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aii:ijcmss:v:2:y:2011:i:6:p:49-55. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mr. Asif Anjum (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.