THE EFFECT OF MANAGEMENT AND WORKING CAPITAL POLICIES ON THE PROFITABILITY OF MANUFACTURING COMPANIES LISTED IN INDONESIA STOCK EXCHANGE

Bobby Cornelius, Sapto Jumono

Abstract


The purpose of this study was to determine the effect of the receivable period, the debt period, cash turnover, investment policies, and financing policies on profitability. This study used linear regression analysis with 30 manufacturing sector companies listed on the Indonesia Stock Exchange in 2015-2017 used as a sample. The results showed that there was a statistical significance between profitability, measured through the receivable period, the working capital investment policy, and the working capital financing policy. Extension of the credit period to customers is a cost for the company. Following a conservative investment policy by having high-level short-term investments has a negative effect on profitability and firm value. While working capital financing policies have a significant positive effect on profitability, following a conservative financing policy by using more long-term debt to fund the company's operating activities has a positive effect on company profitability.


Keywords


Account Receivable Period, Working Investment Policy, Working Financing Policy, Profitability

References


Deloof, M. (2003). Does working capital management affect profitability of Belgian firms? Journal of Business Finance and Accounting, 30(3–4), 573–587. https://doi.org/10.1111/1468-5957.00008

Elim, J. (2019). Model of Firm Value – Indonesian Stock Exchange Case. International Journal of Economics and Financial Issues, 9(3), 154–162. https://doi.org/10.32479/ijefi.8036

Falavi, M., & Abdoli, M. R. (2015). the Efficiency of Data Mining Models in Determining the Effect of Working Capital Management on Corporate Performance. International Journal of Academic Research, 7(1), 339–343. https://doi.org/10.7813/2075-4124.2015/7-1/B.57

Falope, O. I., & Ajilore, O. T. (2009). Working capital management and corporate profitability: Evidence from panel data analysis of selected quoted companies in Nigeria. Research Journal of Business Management, 3(3), 73–84. https://doi.org/10.3923/rjbm.2009.73.84

Gill, A. S., & Biger, N. (2013). The impact of corporate governance on working capital management efficiency of American manufacturing firms. Managerial Finance, 39(2), 116–132. https://doi.org/10.1108/03074351311293981

Green, S., Committee, R., Chairperson, C., Faculty, E., Member, C., Faculty, E., … Riedel, E. (2013). Walden University. https://doi.org/10.1111/j.1467-8616.2008.00521.x Malik,




DOI: https://doi.org/10.26486/jramb.v7i1.1418

Article Metrics

Abstract view : 14 times

Refbacks

  • There are currently no refbacks.


 

JRAMB : Jurnal Riset Akuntansi Mercu Buana Indexed by

Google ScholarCrossref logo Creative Commons License ipiii.pngDimensions

 

 

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.