ECONOMIC EVALUATION OF SHARE PRICES OF BEVERAGE AND FOOD SECTOR IN CSE
Abstract
The Colombo Stock Exchange (CSE) is the pivotal Stock exchange of Sri Lanka and acts as the backbone of the financial market. This is the center for trading where both private sector organizations and the government can raise long-term funds. The shares of all listed companies are traded in this market which is freely accessible to any potential buyer or seller. Less awareness on investor ratios among the ordinary and professional investors is a barrier for making effective and economic investment decisions as the ultimate goal of investing is maximizing the profit. Therefore, main purpose of this study is to find out the factors affecting the share prices and to develop a specific representative model for ordinary and professional investors on beverage and food sector in CSE. Dividends Per Share (DPS), Earnings Per Share (EPS),Price Earnings Ratio (PER), Return On Equity (ROE), Debt to Equity Ratio (D/R),Dividend cover, Assets to Equity Ratio(A/E) and Liquidity Ratio were dependent variables and market value per share was the dependent variable for Multiple Linear Regression analysis. Descriptive analysis was used to present collected primary data of 60 ordinary and professional investors by using a questionnaire and the multiple linear regression statistical technique with sub sets was used to identify the investor ratio that influences the change of share prices in beverage and food sector. The study revealed that most of investors are lack of knowledge on these investor ratios. They are not much preferred to invest in this beverage and food sector. The investor ratios: Earnings Per Share, Dividends Per Share, Dividend Cover and Return On Equity have direct influence on investor’s decision making to invest in this sector. It is predicted that if the present condition of the financial market is constant, there will be an increasing trend in share prices of beverage and food sector in CSE.
Key Words: Colombo Stock Exchange, Investor Ratios, Representative Model
For full paper: fmscresearch@sjp.ac.lk
