WORKING CAPITAL MANAGEMENT AND PROFITABILITY; THE CASE OF PUBLICLY LISTED MANUFACTURING COMPANIES IN INDONESIA

Novella, Carita Amelia (2016) WORKING CAPITAL MANAGEMENT AND PROFITABILITY; THE CASE OF PUBLICLY LISTED MANUFACTURING COMPANIES IN INDONESIA. Diploma thesis, Universitas Andalas.

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Abstract

The purpose of this research is to analyze the relationship between working capital management and profitability and introduces empirical evidence about working capital management and its effect to the profitability of publicly listed Manufacturing Companies in Indonesia covering the period 2010-2014. The independent variables in this research are accounts receivable days (ARD), accounts payable days (APD), cash conversion cycle (CCC) and current ratio (CR). As for dependent variable is return on equity (ROE). As control variable are natural logarithm of sales (LOS) which represents the firm size and current assets turnover (CAT). Analysis technique that is used is regression analysis technique, and Hypothesis analysis technique that is used is goodness of fit test by using T-test, and coefficient of determination test (R2). The result showed that accounts payable days (APD), cash conversion cycle (CCC) and firm size (LOS) have negative relationship by using return on equity (ROE) as the dependent variable. Meanwhile, as for the accounts receivable days (ARD), current ratio (CR) and current assets turnover (CAT) have negative relationship towards return on equity (ROE). Among the variables, only current ratio (CR), Firm size (LOS) and current assets turnover (CAT) shows significant relationship towards profitability. Keyword: Return on equity (ROE), Accounts Receivable Days (ARD), Accounts Payable Days (APD), Cash Conversion Cycle (CCC), Current Ratio (CR), Firm Size, Current Asset Turnover (CAT)

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