The Effect of Working Capital Management on Profitability in Manufacturing Company Listed in Indonesia Stock Exchange

Abstract

Profitability of manufacturing companies in Indonesia is influenced byvarious financial factors that can be measured using financial ratios. The purpose ofthis study is to analyze the effect of cash turnover, average collection period ofreceivables, and inventory turnover to profitability on manufacturing companies listedon the Indonesia Stock Exchange. The population of this research is manufacturingcompany of consumer goods industry sector listed in Indonesia Stock Exchangeperiod 2011-2015 period. Sampling method used was purposive sampling and 23companies were obtained as sample. The method of analysis used is multipleregression analysis. Based on the result of t test, cash turnover is positively relatedand significant to profitability. While the average collection period of receivables has anegative and significant impact on profitability. Inventory turnover has no significanteffect on profitability. The results simultaneously with F test show that all independentvariables have significant effect to ptofitability. The adjusted R square value of 0.135indicates that 13.5% profitability can be explained by independent variables of cashturnover, average collection period and inventory turnover. While the rest of 86.5% isexplained by other variables.