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Working Capital Management and Leverage to Profitability: Case of Manufacturing Firms in Indonesia

Sany, Sany and WINATA, ANDREW and YASIN, TERESA VELINE (2023) Working Capital Management and Leverage to Profitability: Case of Manufacturing Firms in Indonesia. International Journal of Organizational Behavior and Policy, 2 (1). pp. 55-66. ISSN e-ISSN 29619548

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      Abstract

      This study aims to investigate whether Working Capital Management (WCM) and leverage affect firm profitability. Data concern was gathered from Bloomberg database terminal. Sample is manufacturing companies listed in Indonesian Stock Exchange (IDX) over the period of 2014 - 2020, which already established for some time. WCM is measured by using Cash Conversion Cycle (CCC), profitability is proxied with ROA while leverage is proxied by Debt-to-Equity. We find that the length of CCC days does not affect profitability, while the higher proportion of debt to equity will reduce profitability, on the other hand, the higher sales growth will enhance better firms� profitability performance. Our findings contribute to understanding of the relationship of CCC and leverage on profitability in emerging markets.

      Item Type: Article
      Uncontrolled Keywords: Profitability, Cash Conversion Cycle, Working Capital Management, Leverage
      Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
      Divisions: Faculty of Economic > Accounting Department
      Depositing User: Admin
      Date Deposited: 08 Apr 2023 18:44
      Last Modified: 03 Jun 2024 13:23
      URI: https://repository.petra.ac.id/id/eprint/20302

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