Working Capital and Profitability Performance: Evidence from Indonesian Mining Companies Listed in the Indonesian Stock Exchange
Article Sidebar
Published:
Mar 26, 2019
Keywords:
Working capital management, working capital elements, cash conversion cycle, inventory turnover, average collection period, current ratio, return on assets, profitability.
Main Article Content
Abstract
Financial data from the 10 biggest Indonesian mining companies listed on the Indonesian Stock Exchange (IDX), from the period of 2011 to 2015, were collected and analyzed. The purpose of this study was to establish the relationship among working capital components, including financial performance as measured by return on assets (ROA). The results of the study indicated that there are some weak positive correlations between working capital elements and profitability (return on assets), and some negative correlations between working capital elements and ROA. Overall, the correlations were weak and not significant.
Article Details
Section
Research Articles
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Copyright: Asia-Pacific International University reserve exclusive rights to publish, reproduce and distribute the manuscript and all contents therein.
References
Baidh, M. (2013). Effects of working capital management on profitability of companies. Anusandhanika, 5(1), 247–251. Retrieved from https://search.proquest.com/docview/ 1650906631?accountid=39909
Barine, M. (2012). Working capital management efficiency and corporate profitability: Evidences from quoted firms in Nigeria. Journal of Applied Finance and Banking, 2(2), 215–237. Retrieved from http://search. proquest.com/docview/1321674112?accountid=39909
Biery, M. (2013, April 12). Businesses seeking working capital–survey. Forbes.com. Retrieved from: http://www.forbes.com/sites/sageworks/2013/04/12/businesses-seeking-working-capital-survey/ #637 6322c1a78
Charitou, M., Lois, P., & Santoso, H. (2012). The relationship between working capital management and firm's profitability: An empirical investigation for an emerging Asian country. International Business & Economics Research Journal, 11(8), 839. Retrieved from https://search.proquest.com/docview/ 1418719094?accountid=39909
Goel, S. (2013). Working capital management efficiency and firm profitability: A study of Indian retail industry. South Asian Journal of Management, 20(3), 104–121. Retrieved from http://search.proquest. com/docview/1450595360?accountid=39909
Ilerisoy, M. (2015). Essays on liquidity risk, credit market contagion, and corporate cash holdings (Order No. 3726920). (Doctoral dissertation, University of Iowa). Retrieved from ProQuest Dissertations & Theses Global (UMI No. 1733644550).
Marr, B. (2012). Key performance indicators: The 75 measures every manger needs to know. London: Pearson.
Mohamad, N., & Saad, N. (2010). Working capital management: The effect of market valuation and profitability in Malaysia. International Journal of Business and Management, 5(11). Retrieved from http://www. ccsenet.org/journal/index.php/ijbm/article/view/8066/6095
Platt, H. (2010). Lead with cash: Cash flow for corporate renewal. London, UK: Imperial College Press.
Rahman, M., Uddin, M., & Ibrahim, S. (2015). Measuring the relationship between working capital management and profitability: Empirical evidence from Bangladesh. Journal of Accounting and Finance, 15(8), 120–132. Retrieved from http://search.proquest.com/docview/1766293217? accountid=39909
Sarkar, C., & Sarkar, A. (2013). Impact of working capital management on corporate performance: An empirical analysis of selected public sector oil & gas companies in India. International Journal of Financial Management, 3(2), 17–28. Retrieved from http://search.proquest.com/docview/1478012855? accountid=39909
Setiyaningsih, T., Rustiana, S., Jamilah, S., & Parewangi, A. (2014). Optimalization of profitability through working capital management and capital structure: Evidence from Indonesian banking industry. St. Louis: Federal Reserve Bank of St Louis. Retrieved from https://search.proquest.com/docview/ 1698362593?accountid=39909
Valipour, H., & Jamshidi, A. (2012). Determining the optimal efficiency index of working capital management and its relationship with efficiency of assets in categorized industries: Evidence from Tehran stock exchange (TSE). Advances in Management and Applied Economics, 2(2), 191–209. Retrieved from https://search.proquest.com/docview/1021053486?accountid=39909
White, G., Sondhi, A., & Fried, D. (1994). The analysis and use of financial statements. New York, NY: John Wiley & Sons, Inc.
Zakaria, N., & Amin, J. (2013). Working capital financing and management in Malaysian construction companies. Journal of Current Issues in Finance, Business and Economics, 6(2), 287–298. Retrieved from http://search.proquest.com/docview/1626693082?accountid=39909
Barine, M. (2012). Working capital management efficiency and corporate profitability: Evidences from quoted firms in Nigeria. Journal of Applied Finance and Banking, 2(2), 215–237. Retrieved from http://search. proquest.com/docview/1321674112?accountid=39909
Biery, M. (2013, April 12). Businesses seeking working capital–survey. Forbes.com. Retrieved from: http://www.forbes.com/sites/sageworks/2013/04/12/businesses-seeking-working-capital-survey/ #637 6322c1a78
Charitou, M., Lois, P., & Santoso, H. (2012). The relationship between working capital management and firm's profitability: An empirical investigation for an emerging Asian country. International Business & Economics Research Journal, 11(8), 839. Retrieved from https://search.proquest.com/docview/ 1418719094?accountid=39909
Goel, S. (2013). Working capital management efficiency and firm profitability: A study of Indian retail industry. South Asian Journal of Management, 20(3), 104–121. Retrieved from http://search.proquest. com/docview/1450595360?accountid=39909
Ilerisoy, M. (2015). Essays on liquidity risk, credit market contagion, and corporate cash holdings (Order No. 3726920). (Doctoral dissertation, University of Iowa). Retrieved from ProQuest Dissertations & Theses Global (UMI No. 1733644550).
Marr, B. (2012). Key performance indicators: The 75 measures every manger needs to know. London: Pearson.
Mohamad, N., & Saad, N. (2010). Working capital management: The effect of market valuation and profitability in Malaysia. International Journal of Business and Management, 5(11). Retrieved from http://www. ccsenet.org/journal/index.php/ijbm/article/view/8066/6095
Platt, H. (2010). Lead with cash: Cash flow for corporate renewal. London, UK: Imperial College Press.
Rahman, M., Uddin, M., & Ibrahim, S. (2015). Measuring the relationship between working capital management and profitability: Empirical evidence from Bangladesh. Journal of Accounting and Finance, 15(8), 120–132. Retrieved from http://search.proquest.com/docview/1766293217? accountid=39909
Sarkar, C., & Sarkar, A. (2013). Impact of working capital management on corporate performance: An empirical analysis of selected public sector oil & gas companies in India. International Journal of Financial Management, 3(2), 17–28. Retrieved from http://search.proquest.com/docview/1478012855? accountid=39909
Setiyaningsih, T., Rustiana, S., Jamilah, S., & Parewangi, A. (2014). Optimalization of profitability through working capital management and capital structure: Evidence from Indonesian banking industry. St. Louis: Federal Reserve Bank of St Louis. Retrieved from https://search.proquest.com/docview/ 1698362593?accountid=39909
Valipour, H., & Jamshidi, A. (2012). Determining the optimal efficiency index of working capital management and its relationship with efficiency of assets in categorized industries: Evidence from Tehran stock exchange (TSE). Advances in Management and Applied Economics, 2(2), 191–209. Retrieved from https://search.proquest.com/docview/1021053486?accountid=39909
White, G., Sondhi, A., & Fried, D. (1994). The analysis and use of financial statements. New York, NY: John Wiley & Sons, Inc.
Zakaria, N., & Amin, J. (2013). Working capital financing and management in Malaysian construction companies. Journal of Current Issues in Finance, Business and Economics, 6(2), 287–298. Retrieved from http://search.proquest.com/docview/1626693082?accountid=39909