The Influence of Working Capital Management on Financial Performance and Company Profitability
Keywords:
Working Capital Management, Financial Performance, Company Profitability, Growth RateAbstract
This study aims to analyze the effect of current asset management on company solvency and profitability, and to examine the moderating role of company growth rate in the relationship between current asset management and financial performance. The data used in this study were obtained from the financial statements of manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2018–2022 period. The research method used is multiple linear regression to test the relationship between current asset management and financial performance, as well as to test the moderating role of company growth rate. The results show that better current asset management has a positive and significant effect on company solvency and profitability. In addition, the company growth rate was found to moderate the relationship between current asset management and financial performance, although the effect is negative. This study suggests that companies should focus on efficient current asset management to enhance financial performance, while also being mindful of the risks posed by rapid growth in maintaining solvency and profitability.
References
Alsulayhim, N. (2019). The Relationship between Working Capital Management and Profitability. International Business Research, 12(8), 142–152. https://doi.org/10.5539/IBR.V12N8P142
Koapaha, H. P., & Supit, V. E. (2022). Financial ratio analysis to assess the financial performance of pt. angkasa pura i (persero). Jurnal Ilmiah Manajemen Bisnis Dan Inovasi Universitas Sam Ratulangi, 9(1). https://doi.org/10.35794/jmbi.v9i1.41158
Kusuma, A. M., & Estiningsih, W. (2023). Analisis rasio likuiditas, profitabilitas, solvabilitas dan aktifitas sebagai alat penilaian serta implementasinya terhadap kinerja keuangan perusahaan pada pt. aneka tambang tbk. JURNAL ILMIAH GLOBAL EDUCATION, 4(1), 272–281. https://doi.org/10.55681/jige.v4i1.584
Locker, A., & Grosse-Ruyken, P. T. (2013). Working Capital Management (pp. 111–144). Springer Gabler, Wiesbaden. https://doi.org/10.1007/978-3-658-00748-5_4
Mukafich, M. D., & Pratama, B. N. (2024). Optimasi Net Working Capital dalam Meningkatkan Perputaran Modal Kerja pada Pt. Sidomuncul. Ekalaya, 2(4), 28–36. https://doi.org/10.59966/ekalaya.v2i4.1451
Naidu, MONISHA. Y. (2024). A Systematic Literature Review of Working Capital Management in Business Organizations. Indian Scientific Journal Of Research In Engineering And Management. https://doi.org/10.55041/ijsrem33393
Narayanan, N., Ghapar, F., Chew, L., Kaliani Sundram, V. P., Jayamani, U., & Muhammad, A. (2024). Optimizing Working Capital Management in Supply Chain Finance: A Multi-Dimensional Approach. Information Management and Business Review, 16(2(I)S), 44–52. https://doi.org/10.22610/imbr.v16i2(i)s.3767
Pattiasina, V., Patiran, A., Marani, Y., Tammubua, M. H., & Marihi, L. O. (2024). Analysis of the Implementation of Working Capital Management on Company Profitability. https://doi.org/10.55529/jmc.44.23.29
Schawel, C., & Billing, F. (2012). Working Capital Management (pp. 208–209). Gabler. https://doi.org/10.1007/978-3-8349-4105-3_95
Sembiring, H. (2020). Analysis of liquidity, solvency, and profitability ratios to assess the company financial performance of pt. indofood cbp sukses makmur, tbk. 13(2). https://doi.org/10.48042/JURAKUNMAN.V13I2.52
Sharma, P., Kaneria, A., Pathak, G. P., & Grover, R. (2024). Impact of working capital management on profitability in fmcg companies: a case study of itc ltd. ShodhKosh Journal of Visual and Performing Arts, 5(6). https://doi.org/10.29121/shodhkosh.v5.i6.2024.3024
Sowjanya, A. M., & Singhal, P. (2024). A study on working capital management in Acc Pvt Ltd. South Asian Journal of Engineering and Technology, 14(3), 1–9. https://doi.org/10.26524/sajet.2024.14.4
Yusoff, H., Ahmad, K., Qing, O. Y., & Zabri, S. M. (2018). The relationship between working capital management and firm performance. Advanced Science Letters, 24(5), 3244–3248. https://doi.org/10.1166/ASL.2018.11351.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Adine Setya Wardhani
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
