Analysis of The Effect of Working Capital Management on Profitability In Manufacturing Companies In Indonesia

Putri Ahmad; Angelya Ningsih; Natalia Sitorus; Tia Sucipto

doi:10.53697/emak.v6i2.2312

Authors

Putri Meiriska Ahmad Universitas Pembangunan Panca Budi Medan
Angelya Ningsih Universitas Pembangunan Panca Budi Medan
Natalia Despina Sitorus Universitas Pembangunan Panca Budi Medan
Tia Novira Sucipto Universitas Pembangunan Panca Budi Medan

DOI:

https://doi.org/10.53697/emak.v6i2.2312

Keywords:

Working Capital Management, Profitability, Cash Conversion Cycle, Return on Assets (ROA), Manufacturing Companies

Abstract

This study aims to analyze the effect of working capital management on profitability in manufacturing companies in Indonesia. The method employed is a literature review by examining five related scientific journals. The findings indicate that efficient working capital management, particularly through the management of the Cash Conversion Cycle (CCC), has a positive impact on company profitability. Components such as receivables, inventory, and payables management play a crucial role in enhancing operational efficiency and liquidity, ultimately leading to improved profitability. Optimal working capital management enables companies to maximize Return on Assets (ROA) as an indicator of financial performance efficiency. These findings provide insights for companies to improve working capital management to achieve financial stability and sustainability.

Downloads

Download data is not yet available.

References

Al-Dhubaibi, A. A. S. (2024). Unveiling the Mediating Effect of Intellectual Capital on the Relationship between Management Control System, Management Accounting, and Business Performance. International Journal of Mathematical, Engineering and Management Sciences, 9(4), 844–864. https://doi.org/10.33889/IJMEMS.2024.9.4.044

Ardiansah, T., Wahyudi, I. (2022). Pengaruh Manajemen Modal Kerja Terhadap Profitabilitas Perusahaan. Jurnal Riset Ilmu Akuntansi Vol.1, No.3 September 2022.

Brigham, E. F., & Ehrhardt, M. C. (2023). Financial Management: Theory and Practice (16th ed.). Cengage Learning.

Dewi, Ni Made Rustia., I Gede Supartha Wisadha. (2015). Pengaruh Manajemen Modal Kerja Pada Profitabilitas Perusahaan Manufaktur. E-Jurnal Akuntansi Universitas Udayana 12.3 (2015): 593-612.

Fernández-López, S. (2020). Effects of working capital management on firms’ profitability: evidence from cheese-producing companies. Agribusiness, 36(4), 770–791. https://doi.org/10.1002/agr.21666

Gitman, L. J. (2022). Principles of Managerial Finance (15th ed.). Pearson Education.

Hariyati. (2019). The mediating effect of intellectual capital, management accounting information systems, internal process performance, and customer performance. International Journal of Productivity and Performance Management, 68(7), 1250–1271. https://doi.org/10.1108/IJPPM-02-2018-0049

He, W. (2017). The effect of the split share structure reform on working capital management of Chinese companies. Global Finance Journal, 33, 27–37. https://doi.org/10.1016/j.gfj.2017.02.003

Hendayana, Y. (2021). The Effect of Asymmetry Information and Profit Management Against Cost of Capital Equity in the Company Manufacturing Registered in Bursa Efek Indonesia. Review of International Geographical Education Online, 11(5), 2071–2077. https://doi.org/10.48047/rigeo.11.05.113

Jahfer, A. (2015). Effects of working capital management on firm profitability: Empirical evidence from Sri Lanka. International Journal of Managerial and Financial Accounting, 7(1), 26–37. https://doi.org/10.1504/IJMFA.2015.067498

Koroma, S. (2024). The Moderating Effect of Economic Policy Uncertainty on the Relationship Between Working Capital Management and Profitability: Evidence from UK Non-Financial Firms. SAGE Open, 14(2). https://doi.org/10.1177/21582440241242552Miller, R. L., & Hart, P. (2021). Financial Management: An Introduction to Corporate Finance. Pearson Prentice Hall.

Oh, K. (2023). Effects of Working Capital Management on Small and Mediu m-sized Enterprises’ Profitability from the Continu ity of Su pply Chain Relationships. Global Business and Finance Review, 28(5), 51–66. https://doi.org/10.17549/gbfr.2023.28.5.51

Putra, E., & Sari, R. A. (2017). Analisis Manajemen Modal Kerja Dalam Meningkatkan Profitabilias Pada PT. Perkebunan Nusantara III (Perseroan). Jurnal Riset Akuntansi & Bisnis Vol 17 No 1 2017.

Saadat, M. (2016). The effect of human resource management practices of marketing sector on internal organizational social capital (case study: Manufacturing companies of Gilan province). International Business Management, 10(10), 2027–2032. https://doi.org/10.3923/ibm.2016.2027.2032

Salehi, M. (2022). The effect of knowledge management on intellectual capital, social capital, and firm innovation. Journal of Facilities Management, 20(5), 732–748. https://doi.org/10.1108/JFM-06-2021-0064

Sapetu, Y., Saerang, I. S., Soepeno, D. (2017). Pengaruh Manajemen Modal Kerja Terhadap Profitabilitas Perusahaan (Studi Kasus Pada Perusahaan Food And Beverages Yang Terdaftar Di Bursa Efek Indonesia Periode 2012-2015). Jurnal EMBA Vol.5 No.2 Juni 2017.

Saudi, M. H. M. (2019). Effect of working capital management on supply chain performance and company growth in Malaysian manufacturing industry. International Journal of Supply Chain Management, 8(1), 256–265. https://www.scopus.com/inward/record.uri?partnerID=HzOxMe3b&scp=85062613420&origin=inward

Suryaputra, G., & Christiawan, Y. J. (2016). Pengaruh Manajemen Modal Kerja, Pertumbuhan Penjualan dan Ukuran Perusahaan Terhadap Profitabilitas Pada Perusahaan Properti dan Real Estate Yang Terdaftar di Bursa Efek Indonesia (BEI) Tahun 2010-2014. Business Accounting Review, Vol. 4, No. 1, Januari 2016.

Utami, M. S., & Dewi, M. R. (2016). Pengaruh Manajemen Modal Kerja Terhadap Profitabilitas Perusahaan Manufaktur Yang Terdaftar Di Bursa Efek Indonesia. E-Jurnal Manajemen Unud, Vol. 5, No. 6, 2016