The Effect of Capital Working Management on the Profitability
Journal Title: Jurnal Keuangan dan Perbankan - Year 2018, Vol 22, Issue 1
Abstract
Companies must maintain the sustainability business. In order to keep their existence and competitiveness, companies must increase profitability in every year. It also applies to state fertilizer companies. However, 10 years of history (2005-2014), the state fertilizer company have been facing difficulties in maintaining business sustainability. Profitability fluctuates and tends to decrease every year. One of the causes is inefficient working capital management. The objective of this study is to determine the relationship between working capital management and corporate profitability. To ensure the absence of the influence of unexamined factors, this study uses control variables of firm size, financial leverage, and gross domestic product. This research uses a positivist paradigm with a quantitative approach and multiple regression analysis. The results of this study indicate that state fertilizer companies will be able to increase ROA by accelerating Days of Sales in Inventory and Days of Payables. Higher assets, reduce profitability, and increasing debt withdrawal, which further declines the profitability. State fertilizer companies should accelerate inventory turnover and obligation payments to suppliers to minimize the risk of foreign exchange loss, considering that 80% of raw materials are still imported. In addition, state fertilizer should maintain asset quality and minimize debt withdrawal to increase profitability.
Authors and Affiliations
Slamet Mulyono, Djumahir Djumahir, Kusuma Ratnawati
Keywords
Related Articles
- EP ID EP417970
- DOI 10.26905/jkdp.v22i1.1332
- Views 136
- Downloads 0
Households, Financial Distress, and Predatory Lending: An Experimental Study
A substantial part of households and micro enterprises, particularly in developing countriesincluding Indonesia, did not have access to formal financial institutions which thenlead them to borrow money from illegal loan...
Relationship between Intellectual Capital with Profitability and Productivity in Indonesian Banking Industry
This study aims to examine the impact of Intellectual Capital (VACA, VAHU, STVA) on profitability and productivity. The population in this study is a Banking Company listed on the Indonesia Stock Exchange from 2014 to 20...
Liquidity, asset quality, and efficiency to sustainable growth rate for banking at Indonesia Stock Exchange
The focus of the bank to increase profit. However, the increase in profit is not important to focus on because the sustainability of growth is more important. Measure the level of sustainable growth is an important facto...
Islamic Financial Literacy and Personal Financial Planning: A Socio-Demographic Study
This study aims to measure the level of Islamic Financial Literacy (IFL) in Solo society and to test the effect of IFL on personal financial planning. The socio-demographic variables such as age, gender, marital status,...
A note on Bitcoin’s price volatility
Cryptocurrencies such as bitcoin are sometimes referred to as the new gold and the buzz that surrounded bitcoins in the last few years is akin to the old day’s gold rush. Cryptocurrencies are not directly linked to any m...