THE IMPACT OF WORKING CAPITAL MANAGEMENT TO PROFITABILITY OF MANUFACTURING COMPANY LISTED IN INDONESIAN STOCK EXCHANGE
Abstract
ABSTRACT
Â
Manufacturing companies in Indonesia are increasing in number in recent years. Large growth should be balanced with good working capital management due to the manufacturing company is carrying out buying of raw material activity, afterward convert them into semi-finished goods and finished goods. Cycles from purchasing goods, inventory management, debt repayment, product sales, cash received will have effect on profitability.
Purpose of this study to determine whether working capital management affect profitability of manufacturing companies publicly listed on Indonesian Stock Exchange from 2010-2015. This study uses quantitative method by using linear regression analysis tool on panel data.
Results of this study found that the component of working capital proved to affect profitability of manufacturing companies Listed in Indonesian Stock Exchange. Therefore the companies should be able to manage properly their working capital. Manufacturing companies should improve their management pattern applied to their current assets and current liabilities. Working capital management should be performed by shortening cash conversion cycle, debt withholding, and by increasing current assets value due to it proves to be able to improve profitability of the company.
Keywords
working capital management, profitability, CATAR, CLTAR, Current Ratio, Cash Ratio, CCC, ROA, Manufacturing Company, Indonesian Stock Exchange
Full Text:
PDFReferences
Aktas, N., Croci, E., Petmezas, D. (2015). Is working capital management value enhancing? Evidence from firm performance and investments. Journal of Corporate Finance 30, 98-113. doi:10.1016/j.jcorpfin.2014.12.008
Amiri,Esmaeil (2014). Aggressive Investment, Financing Policy of working capital with profitability. Advanced Research in Economic and Management Sciences (AREMS). Volume 19, 2014 ISSN: 2322-2360 WWW.universalrg.org
Badan Pusat Statistik.2017. Perkembangan Indeks Produksi Industri Manufaktur Besar dan Sedang 2014-2016. http://www.bps.go.id.
Riyanto, Bambang . (2008). Dasar-dasar Pembelanjaan Perusahaan. Yogyakarta: Penerbit GPFE
Baños-Caballero, S., et al., Working capital management, corporate performance, and financial constraints, Journal of Business Research (2013), http://dx.doi.org/10.1016/j.jbusres.2013.01.016
Brealey, R. A., Myers, S. C., & Allen, F. (2011). Principles of corporate finance. New York, NY: McGraw-Hill/Irwin.
Budiyanti, Eka (2016). Penguatan Kembali Industri Manufaktur Indonesia. http://berkas.dpr.go.id/puslit/files/info_singkat/Info%20Singkat-VIII-12-II-P3DI-Juni-2016-50.pdf
Chuan-guo Li, Hui-min Dong, Shou Chen, and Yan Yang, “Working Capital Management, Corporate Performance, and Strategic Choices of the Wholesale and Retail Industry in China,†The Scientific World Journal, vol. 2014, Article ID 953945, 15 pages, 2014. doi:10.1155/2014/953945
Dalayeen, B. A. (2017). Working capital management and profitability of real estate industry in jordan: An empirical study. Journal of Applied Finance and Banking, 7(2), 49-57. Retrieved from https://search.proquest.com/docview/1874389831?accountid=25704
Darmawan, Arif (2016). Perkembangan Industri Manufaktur di Indonesia tahun 2015-2016. https://www.academia.edu/29633931/Perkembangan_Industri_Manufaktur_di_Indonesia_tahun_2015-2016
Deloof,Marc (2003). Does working capital management affect profitability of Belgian firms?. Journal of business, finance & accounting. 30(3) &(4).
Dong, H.P. dan J. Su. 2010. The Relationship between Working capital Management and Profitability: A Vietnam Case. International Research Journal of Finance and Economics, Vol. 49 Economics, Vol. 47
Julius Enqvist,Michael Graham,Jussi Nikkinen.The impact of working capital management on firm profitability in different business cycles: Evidence from Finland(August 2014).Research in International Business and Finance.http://www.sciencedirect.com/science/article/pii/S0275531914000191
Kim, C., Mauer, D., & Sherman, A. (1998). The Determinants of Corporate Liquidity: Theory and Evidence. Journal of Financial and Quantitative Analysis, 33(3), 335-359. doi:10.2307/2331099
Kroes, J., & Manikas, A. (2014). Cash flow management and manufacturing firm financial performance: A longitudinal perspective. International Journal of Production Economics, 148, 37-50. doi:10.1016/j.ijpe.2013.11.008
Long, M., Malitz, I., & Ravid, S. (1993). Trade Credit, Quality Guarantees, and Product Marketability. Financial Management, 22(4), 117-127. Retrieved from http://www.jstor.org/stable/3665582
Mohamad, N.E.A.B. dan N.B.M. Saad. 2010. Working capital Management: The Effect of Market Valuation and Profitability in Malaysia. Intemational Joumal of Business and Management, Vol. 5 No. 11
Monica Singhania Piyush Mehta , (2017)," Working capital management and firms' profitability: evidence from emerging Asian countries ", South Asian Journal of Business Studies, Vol. 6 Iss 1 pp. -Permanent link to this document: http://dx.doi.org/10.1108/SAJBS-09-2015-0060
Mustafa Afeef, Kausar Takreem, Qadar Bakhsh Baloch.Does Efficient Management of Working Capital have a Parallel Impact on the Profitability of Small and Large Firms? (2015). The Journal of Humanities and Social Sciences;Peshawar. https://search.proquest.com/docview/1815500288?accountid=25704 Performance of Manufacturing Sector in Pakistanâ€. International Research Journal of Finance
Nazir, Mian Sajid and Afza, Talat, Impact of Aggressive Working Capital Management Policy on Firms’ Profitability (July 29, 2009). The IUP Journal of Applied Finance, Vol. 15, No. 8, pp. 19-30, August 2009. Available at SSRN: https://ssrn.com/abstract=1440619
Qayyum, A., A. Rahemen, T. Afza, dan M.A. Bodla. 2010. Sector-wise Analysis of Working Capital Management and Firm Performance in Manufacturing Sector of Pakistan. Interdisciplinary Journal of Contemporary Research In Business, Vol. 2 No. 7
Qurashi, Mubashir. Zahoor, Muhammad. Working Capital Determinants for the UK Pharmaceutical Companies Listed on FTSE 350 Index (January, 2017).International Journal of Academic Research in Accounting, Finance and Management Sciences Vol. 7, No.1, January 2017, pp. 11–17. URL: http://dx.doi.org/10.6007/IJARAFMS/v7-i1/2535
Rahemen, A., T. Afza, A. Qayyum dan M.A. Bodla. 2010. “Working Capital Management and Corporate
Rasisi, Rachmat. 2016. Struktur Aktiva, Ukuran, Pertumbuhan, dan Profitabilitas Perusahaan Pada Struktur Modal Perusahaan Manufaktur. Bandung.
Richard Kofi Akoto, Dadson Awunyo-Vitor and Peter Lawer Angmor. "Working capital management and profitability: Evidence from Ghanaian listed manufacturing firms." Journal of Economics and International Finance 5, no. 9 (2013): 373-379.
Satriya,I Made Dian. Lestari, Putu Vivi. PENGARUH PERPUTARAN MODAL KERJA TERHADAP PROFITABILITAS PERUSAHAAN (2014). http://ojs.unud.ac.id/index.php/Manajemen/article/view/8193
Shin, H.H., Soenen, L., 1998. Efficiency of working capital and corporate profitability. Financial Practice Education 8 (2), 37–45.
Singh, J.P. dan S. Pandey. 2008. Impact of Working capital Management in the Profitability of Hindalco Industries Limited. The ICFAI University Journal of Financial Economics, Vol. 6 No. 4
Temtime, Zelealem Tadess. 2015. Relationship between Working Capital Management, Policies, and Profitability of Small Manufacturing Firms.http://scholarworks.waldenu.edu/dissertations/2105/
Thuvarakan, Senthilmani, Impact of Working Capital Management on Profitability in UK Manufacturing Industry (September 27, 2013). Available at SSRN: https://ssrn.com/abstract=2345804 or http://dx.doi.org/10.2139/ssrn.2345804
Utia, Valiensi, Dewi, Nanny, and Sutisna (2018). Tesis “Pengaruh Manajemen Working Capital terhadap Profitabilitas Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesiaâ€. Magister Manajemen Universitas Padjadjaran. Bandung.
Weston, Fred dan Copeland, Thomas (1999). Manajemen Keuangan. Jakarta: Penerbit Erlangga
Wijaya, A.L. dan J. Murwani. 2010. Pengaruh Kepemilikan Manajerial, Leverage dan Pro! tabilitas terhadap Kebijakan Investasi Perusahaan. Jurnal Dinamika Akuntansi. Vol. 3 No. 1
Wijaya, Anggita Langgeng. "Pengaruh Komponen Working Capital terhadap profitabilitas Perusahaan". Jurnal Dinamika Akuntansi Vol.4 No.1, (Maret2012) pp.20-26. Http://jounal.unnes.ac.id/index.php/jda
Yogendrarajah, Rathiranee, Working Capital Management and its Impact on Financial Performance: An Analysis of Trading Firms (May 31, 2014).
Rathiranee, Y., Sangeetha, T., (2011), Working Capital Management and its Impact on Firms’ Financial Performance: An Analysis of Trading Firms†Presentation in the International Conference at Rajarata University, Sri Lanka.. Available at SSRN: https://ssrn.com/abstract=2444311
Zariyawati, Annuar, Rahim Abdul. Working Capital Management and Corporate Performance: Case of Malaysia. Journal of Modern Accounting and Auditing. Vol. 5 No. 11
DOI: http://dx.doi.org/10.26487/hebr.v2i1.1441
Refbacks
- There are currently no refbacks.
Copyright (c) 2019 Hasanuddin Economics and Business Review
This work is licensed under a Creative Commons Attribution 4.0 International License.
______________________________________________________________________
Hasanuddin Economics and Business Review (ISSN Print: 2549-3221 | ISSN Online: 2549-323X ) is licensed under a Creative Commons Attribution 4.0 International License. Preserved in LOCKSS, based at Stanford University Libraries, United Kingdom, through PKP Private LOCKSS Network program.
Indexing and Abstracting:
