THE INFLUENCE OF WORKING CAPITAL...
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THE INFLUENCE OF WORKING CAPITAL MANAGEMENT AND LIQUIDITY TOWARDS PROFITABILITY ( Case Study : Automotive and Components Industry Listed in Indonesia Stock Exchange 2008-2012) By: Andre Eko Saputro Julianda ID: 109081100007 MANAGEMENT DEPARTMENT INTERNATIONAL CLASS PROGRAM FACULTY OF ECONOMICS AND BUSINESSES STATE ISLAMIC UNIVERSITY SYARIF HIDAYATULLAH JAKARTA 1434 H /2013
Transcript of THE INFLUENCE OF WORKING CAPITAL...
THE INFLUENCE OF WORKING CAPITAL MANAGEMENT AND
LIQUIDITY TOWARDS PROFITABILITY
( Case Study : Automotive and Components Industry Listed in Indonesia Stock
Exchange 2008-2012)
By:
Andre Eko Saputro Julianda
ID: 109081100007
MANAGEMENT DEPARTMENT
INTERNATIONAL CLASS PROGRAM
FACULTY OF ECONOMICS AND BUSINESSES
STATE ISLAMIC UNIVERSITY SYARIF HIDAYATULLAH
JAKARTA
1434 H /2013
CURRICULUM VITAE
PERSONAL DATA
Name : Andre Eko Saputro Julianda
Date of Birth : Padang, June 12 th 1991
Address : Kp. Bintaro RT 007 RW 002
Pesanggrahan Jakarta Selatan
Religion : Islam
Phone : 081-316-622-376
Email : [email protected]
EDUCATIONAL BACKGROUND
1. 1996–1997 : TK Dwi Satria
2. 1997 –2003 : SD Botoran 02 Tulungagung
3. 2003 –2006 : SMP Negeri 1 Padang
4. 2006 –2009 : SMA Negeri 3 Padang
5. 2009–2013 : UIN Syarif Hidayatullah Jakarta
ORGANIZATIONAL EXPERIENCE
1. 2002-2005 : Member of OsisSMPN1 Padang
ABSTRACT
This study aims to analyze the influence of working capital management (working
capital turnover, receivable turnover, inventory turnover) and liquidity (current ratio)
toward profitability (ROI) in the automotive and component companies in Indonesia
Stock Exchange.
Object of this research study is a twelve automotive and components companies listed in
Indonesia Stock Exchange. Financial statement data used 5 years from 2008-2012. The
method is multiple regression analysis.
The results show that there is a simultaneous effect on the working capital turnover,
receivable turnover, inventory turnover, current ratio toward the return on investment. In
this research is founded the analysis result of the most dominant variable that is a current
ratio. The coefficient of determination (adjusted R-square) of 0.161. This means that
working capital turnover, receivable turnover, inventory turnover, and current ratio have
accounted for 16.1% the return on investment.
Keyword : Working Capital Turnover, Receivable Turnover, Inventory Turnover,
Current Ratio, Return on Investment
ABSTRAK
Penelitian ini bertujuan untuk menganalisa pengaruh manajemen modal kerja (working
capital turnover, receivable turnover, inventory turnover) dan likuiditas (Current Ratio)
terhadap profitabilitas (ROI) pada perusahaan otomotif dan komponen di Bursa Efek
Indonesia.
Objek studi penelitian ini adalah 12 perusahaan otomotif dan komponen yang terdaftar
di Bursa Efek Indonesia.Data laporan keuangan yang digunakan adalah laporan
keuangan selama 5 tahun, dari tahun 2008-2012. Metode penelitian yang digunakan
adalah metode analisis regresi berganda.
Hasil penelitian menunjukkan bahwa terdapat pengaruh secara simultan pada working
capital turnover, receivable turnover, inventory turnover, dan current ratio terhadap
Return on Investment. Pada penelitian ini ditemukan hasil analisa variabel yang paling
dominan adalah Current Ratio. Hasil koefisien determinasi (Adjusted R-square) sebesar
0.161. Hal ini berarti working capital turnover, receivable turnover, inventory turnover,
dan current ratio memiliki kontribusi sebesar 16.1 % terhadap Return on Investment.
Kata Kunci : Working Capital Turnover, Receivable Turnover, Inventory Turnover,
Current Ratio, Return on Investment
PREFACE
Assalamu’alaikumWr.Wb.
Firstly thanks to Allah SWT, because of His blessing the writer can finished this
thesis. Shalawat and Salam also give to the guidance prophet Muhammad SAW also to
his best friends.
Thesis entitled “The Influence of Working Capital Management and
Liquidity Toward Profitability” (Case Study : Automotive and Component Industry
listing in Indonesia Stock Exchange 2008-2012). This is the final author in
completing the undergraduate program at the Faculty of Economics and Business
Financial Management Department of the State Islamic University Syarif
Hidayatullah Jakarta.
In this chance, the writer wants to say thanks for supporting and helping from
every party. So, thankful would be for :
1. My parents always give love and compassion, and give me motivation in
completing this thesis. Accompaniment of unceasing prayer in each of these
steps. Thank God.
2. Prof. Dr. Abdul Hamid, MS as dean of the Faculty of Economics and
Business Syarif Hidayatullah Jakarta.
3. Mr. Prof. Dr. Ahmad Rodoni as a first supervisor always motivate me and
provide the best guidance to the author so that they can finish this thesis.
4. Mr. Dr. Indoyama Nasarudin, SE, MAB as a second supervisor always give
guidance for the creation of my thesis with good results.
5. Whole Lecturers and Staff Management Department International FEB UIN
Syarif Hidayatullah Jakarta.
6. To my sister (Kakak Wella Anggelia Permata Sari) and my sister (Vivi
Anggraini), thank you always pray and give encouragement
.
7. Best friend, Arfian Fidya Utama and my friends in management International
(Akira, Aly, Ari, Angga, Luqman, Taufik, Dipa, Gery Surya, Risky, Haris,
Oji, Yaser, Aiya, Rara, Vera, Meta and Innez) thanks to help me in the class.
Don’t give up in finish your thesis. (Gracias)
8. Mr. Sugih, Bu Sri, Pak Dum and also Mr. Dr. Arief Mufraini thanks for
support and suggestion in doing thesis
9. To my friends in Accounting International 2009, and my friends in
Perbankan Syariah (Nia, Madu, and Uko)and also Mutia Risma always
support me. Thanks much time we spent together. May we all succeed.
The Writer realizes there are still many shortcomings in the writing of this
paper, therefore, the authors beg criticism and suggestions that are built from the
readers.
Jakarta, 27 September 2013
The Writer,
Andre Eko Saputro Julianda
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TABLE OF CONTENT
Curriculum Vitae……………………………………………………………..... i
Abstract………………………………………………………………………... ii
Abstrak………………………………………………………………………... iii
Preface……………………………………………………………………….... iv
Table of Content……………………………………………………………… vi
List of Table…………………………………………………………………... x
List of Figure…………………………………………………………………. xi
List of Graph…………………………………………………………………. xii
CHAPTER I INTRODUCTION
A. Background……………………………………………..... 1
B. Problem Formulation…………………………………... . 10
C. Research Objectives…………………………………….. 11
D. Benefit of Research…………………………………….. 11
CHAPTER II LITERATURE REVIEW
A. Working Capital Management…………………………... 13
1. Definition of Working Capital……………………... .. 13
2. Factors Determining Amount of Working Capital… .. 14
3. Sources of Working Capital………………………... .. 16
4. Use of Working Capital……………………………. .. 16
5. Types of Working Capital…………………………. .. 17
6. Definition of Working Capital Management………. .. 18
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7. Ratio of Working Capital Management…………….. .21
B. Liquidity…………………………………………………. 22
1. Understanding Liquidity……………………………. 22
2. Liquidity Ratio……………………………………... . 23
C. Profitability……………………………………………... 25
1. Understanding Profitability………………………… 25
2. Profitability Ratio…………………………………... 27
D. Previous Research………………………………………. 29
E. Logical Framework……………………………………... 36
F. Hypothesis……………………………………………… 38
CHAPTER III RESEARCH METHODOLOGY
A. Scope of Research………………………………………. 40
B. Sampling Method………………………………………. .. 40
C. Data Collection Method………………………………... .. 42
D. Data Analyze Method………………………………….. .. 43
1. Descriptive Statistic………………………………... .. 43
2. Classical Test Assumption…………………………. .. 44
a. Normality Test…………………………………. .. 44
b. Multicollinearity Test……………………………. 45
c. Autocorrelation Test…………………………… .. 46
d. Heteroscedasticity Test……………………….... .. 46
3. Hypothesis Testing…………………………………... 47
a. Multiple Regression Analysis………………….. .. 47
b. Simultaneous Significance Test ( F- Test)……... .. 48
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c. Partial Significance Test ( t- Test)……………… 49
d. Coefficient Determination Test(R2)……………. 49
E. Variable Operational Reseasrch……………………….. 50
1. Independent Variable………………………………. 50
2. Dependent Variable………………………………… 51
CHAPTER IVFINDING AND ANALYSIS
A. General Description of Research Object……………….. . 52
B. Analysis and Discussion……………………………….. . 58
1. Descriptive data……………………………………. . 58
a. Analysis of Return on Investment………………. 58
b. Analysis of Working Capital Turnover…………. 61
c. Analysis of Receivables Turnover……………... . 63
d. Analysis of Inventories Turnover……………… ..66
e. Analysis of Current Ratio……………………… . 68
2. Classical Assumption Test…………………………. .71
a. Normality Test Data……………………………...71
b. Multicolinearity Test…………………………… ..73
c. Autocorrelation Test……………………………...74
d. Heteroscedasticity Test…………………………...75
C. Hypothesis Testing……………….……………………....76
1. Analysis of Multiple Regression………......................76
a. Simultaneous Test ( F- Test)…………………… ..76
b. Partial Test ( T- Test)………………………….....78
c. Coefficient Determination (R Square)…………....80
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D. Intepretation…...………………………………………....80
CHAPTER V CONCLUSION AND IMPLICATION
A. Conclusion……………………………………………… 83
B. Implication……………………………………………… 84
C. Recommendation……………………………………….. 85
REFERENCES……………………………………………………………… 86
APPENDIX………………………………………………………………….. 88
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List of Tables
No. Description Pages
2.1 Overview Previous Research 33
3.1 List of Sample 42
4.1 Return on Investment (2008-2012) 59
4.2 Working Capital Turnover (2008-2012) 61
4.3 Receivable Turnover (2008-2012) 64
4.4 Inventories Turnover (2008-2012) 67
4.5 Current Ratio (2008-2012) 69
4.6 Kolmogrov - Smirnov Normality Test 72
4.7 Multicolinearity Test 74
4.8 Autocorrelation Test 74
4.9 F Test 76
4.10 Partial Test (T Test) 78
4.11 Coefficients Determination 80
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List of Figures
No. Description Pages
1.1 Automobile Sales in Indonesia 2001-2012 5
2.1 Logical Framework 36
4.1 Test Result of Normality Data 73
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List of Appendix
No. Description Pages
1 List of Sample Company (2008-2012) 88
2 Data Processed 89
3 Descriptive Statistics 92
4 Multiple Regression Analysis Test 93
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CHAPTER I
INTRODUCTION
A. Background
In the era of globalization, the company are required to have
competitive advantage and are able to maintain the success and continuity
in improving profitability. The company is established to get the maximum
profit in order to the survival of company can be maintained and
developed well. In achieving the goal, manager of the company always
faced with various problems such as technical, administrative, and
financial (Rukmana, 2011: 1).
The Firm is a profit-driven organization. The firm carries out the
functions of management measures include planning, organizing, and
controlling it well so the main target of the company to make a profit can
be achieved. To realize these goals, the firm must have working capital
management in an effort to produce goods and services that are sufficient
to make a profit. Firm doing several of activities to maximize the available
working capital. Working capital is the current assets used in the
company's operations, which require good management by corporate
managers. Working capital is used for day-to-day operations in the form of
estimates in current assets (Ambarwati, 2010: 111).
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Working capital refers to a firm’s short term assets such as
inventory, and its short-term liabilities, such as money owed to suppliers.
Managing the firm’s working capital is day-to-day activity that ensures
that the firm has sufficient resources to continue its operations and avoid
costly interruptions (Ross et al,2010 : 4).
Working capital management of a firm has been recognized as an
important area in financial management. This field can include decisions
about amount and the combination of current assets and financing them.
The process of working capital management includes decisions about
different aspect of cash investment, the maintenance of certain level of
inventories and managing of receivable and payable accounts. The main
goal of working capital management is to teach and keep an optimized
balance between each component of working capital (Mousavi et al,
2012:141).
Business success heavily depends on the ability of financial
executives to effectively manage receivables, inventory, and payables
(Filbeck and Krueger, 2005). Firms can reduce their financing costs and
increase the funds available for expansion projects by minimizing the
amount of investment tied up in current assets. Most of the financial
managers’ time and effort are allocated in bringing non-optimal levels of
current assets and liabilities back toward optimal levels. Excessive levels
of current assets may have a negative effect on the firm’s profitability
whereas a low level of current assets may lead to lower level of liquidity
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and stock outs resulting in difficulties in maintaining smooth operations
(Afza et al, 2009 : 20).
Efficient management of working capital plays an important role of
overall corporate strategy in order to create shareholder value. Working
capital is regarded as the result of the time lag between the expenditure for
the purchase of raw material and the collection for the sale of the finished
good. The way of working capital management can have a significant
impact on both the liquidity and profitability of the company(Dong. H.P,
2010: 60).
The main purpose of any firm is maximum the profit. Then,
maintaining liquidity of the firm also is an important objective. The
problem is that increasing profits at the cost of liquidity can bring serious
problems to the firm. Thus, strategy of firm must be a balance between
these two objectives of the firms. Because the importance of profit and
liquidity are the same so, one objective should not be at cost of the other.
If we ignore about profit, we cannot survive for a longer period.
Conversely, if we do not care about liquidity, we may face the problem of
insolvency. For these reasons working capital management should be
given proper consideration and will ultimately affect the profitability of the
firm (Dong. H.P, 2010: 60).
Liquidity is one of the components to assess the financial of
company. Liquidity is the ability of a company to meet its short term
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obligations as they mature (Sawir, 2001: 31). If the company is able to
make payments on its maturing obligations, meaning the company in a
liquid state, and vice versa if the company does not have the ability to
make payments, meaning the company in a state liquid that can inhibit the
activity of the company's operations and reduce its effectiveness. Liquidity
can also be shown by the size of the current assets easily converted into
cash such as accounts receivable, marketable securities and inventories.
National Automotive industry is one of the Indonesian economic
driving. Automotive industry chain business has been started
manufacturing components, manufacturing the vehicle itself, the
distribution network and after-sales service, both official and public
workshops, including sales of spare parts network throughout Indonesia. In
addition, the industry is also developing other supporting industries such
as finance and insurance. Thus Automotive industry chain is also creating
huge employment opportunities for the community. Furthermore, the rapid
development of the national automotive industry will attract foreign
investors to participate in developing its business in Indonesia.
The automotive industry is now also increasing, with 107 thousand
units to 132 thousand units in 2012 and 4 thousand units to 100 thousand
units in 2011. Automotive components industry is believed to continue
develop, marked by soaring exports ahead of the January-July in this year
and the value of investments to reach U.S. $ 4 billion. The combined data
show the Indonesian automotive industry automotive component exports
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during the last 7 months of the year rose 8.8% from 29.5 million on the
part of the same period last year to 32 million pieces (kemenperin.go.id).
Based on a survey of the basic plan Indonesian automotive industry
with labor relations in Indonesia, the growth of investment in the
automotive industry in 2011 reached 70 percent. In the third quarter of
2012, an investment of over 1.3 billion U.S. dollars. Thus, the automotive
sector became one of the biggest in Indonesia 2012 (kemenperin.go.id).
One of the automotive industry that growing and sophisticating is a
car. Car is the popular transportation and many of people needed this
transportation. Figure 1.1 is the growth of automotive industry especially
automobile sales data in 2001-2012:
Source : data processed (Gaikindo)
Based on figure 1.1 shows that automobile sales fluctuate from
year to year. In 2009-2012 increased automobile sales each year. In 2009
amounted by 486,061 units then in 2012 amounted 1,116,230 units.
0
200000
400000
600000
800000
1000000
1200000
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
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20
10
20
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20
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Figure 1.1 Automobile Sales in Indonesia 2001-2012
Sales
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Increased automobile sales will increase revenue company that also
increasing profitability in the company. According to Munawir (2003:64),
profitability is one of the company's objectives in analyzing financial
statements, that also profitability is the ratio of a company's success in
using wealth productively, thus making a profit or a satisfactory profit. So
if the company is able to produce a satisfactory profit will increase foreign
investors to participate in developing its business in Indonesia.
The rapid growth of the national automobile market began to have a
positive impact on investment in the automotive components industry.
Ministry of Industry projected investment in the automotive components
sector by the end of this year could break the USD 10 trillion, an increase
compared to the 2012 amounting to Rp 6 trillion. Investment growth in the
automotive component industry in line with the rapid growth of industrial
transport equipment, machinery, and equipment to Quarter I/2013 recorded
the highest growth of 10.51 percent (Gaikindo).
Along with a new strategy of automotive industry players in the
world will make Asia as industrial base. This prompted the demand to
various types of components also increase so that opportunities are not
small for the automotive industry in Indonesia to compete,
(focus.news.co.id) so that researchers are interested to know if the auto
companies manage working capital well in improving profitability.
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The few studies that have been done before, there is a difference in
the results of research. There is a difference of research on working capital
management and profitability. Deloof (2003) investigated the relationship
between working capital management and corporate profitability for a
sample of 1,009 large Belgian non-financial firms for the 1992-1996
periods. The result showed that there was a negative relationship between
variables cash conversion cycle as well number of day’s accounts
receivable and inventories toward gross operating income. He suggested
that managers can increase corporate profitability by reducing the number
of day’s accounts receivable and inventories. Less profitable firms waited
longer to pay their bills.
Singh and Pandey (2008) had an attempt to study the working capital
components and the impact of working capital management on
profitability of Hindalco Industries Limited for period from 1990 to 2007.
Results of the study showed that current ratio, liquid ratio, receivables
turnover ratio and working capital to total assets ratio had statistically
significant impact on the profitability of Hindalco Industries Limited.
Lazaridis and Tryfonidis (2006) have investigated relationship
between working capital management and corporate profitability of listed
company in the Athens Stock Exchange. A sample of 131 listed companies
for period of 2001-2004 was used to examine this relationship. The result
from regression analysis indicated that there was a statistical significance
between profitability, measured through gross operating profit, and the
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cash conversion cycle. From those results, they claimed that the managers
could create value for shareholders by handling correctly the cash
conversion cycle and keeping each different component to an optimum
level.
Raheman and Nasr (2007) have selected a sample of 94 Pakistani
firms listed on Karachi Stock Exchange for a period of 6 years from 1999-
2004 to study the effect of different variables of working capital
management on the net operating profitability. From result of study, they
showed that there was a negative relationship between variables of
working capital management including the average collection period,
inventory turnover in days, average collection period, cash conversion
cycle and profitability. Besides, they also indicated that size of the firm,
measured by natural logarithm of sales, and profitability had a positive
relationship.
Finally, Afza and Nazir (2009) made an attempt in order to
investigate the traditional relationship between working capital
management policies and a firm’s profitability for a sample of 204 non-
financial firms listed on Karachi Stock Exchange (KSE) for the period
1998-2005.The study found significant different among their working
capital requirements and financing policies across different industries.
Moreover, regression result found a negative relationship between the
profitability of firms and degree of aggressiveness of working capital
investment and financing policies. They suggested that managers could
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crease value if they adopt a conservative approach towards working capital
investment and working capital financing policies.
Christopher et al (2009) study, they investigated a sample of 14
corporate hospitals in India using panel data analysis for the period 96/97
to 2005/06. The independent variables used were current ratio, quick ratio,
inventory turnover ratio, working capital turnover ratio, debtor´s turnover
ratio, ratio of current asset to total asset, ratio of current asset to operating
income, comprehensive liquidity index, net liquid balance size, leverage
and growth. The dependent variable profitability is measured in terms of
return on investment ROI. From multiple regression analysis, negative
association with ROI can be seen in current ratio, cash turnover ratio,
current asset to operating income and leverage. On the other hand, positive
association with ROI are in quick ratio, debtor´s turnover ratio, current
asset to total asset and growth rate. Conclusion is that hospitals should
concentrate more on efficient use of working capital for increasing the
profitability which would increase the value of hospitals.
Anggarini (2009) in PT Perkebunan Nusantara II (Persero) Tanjung
Morawa in the period 2004-2008. The independent variables used were
current ratio, quick ratio, debt to total equity ratio, and debt to total assets
ratio. The dependent variable is Return on Investment. The result is current
ratio has positive significant effect toward ROI. While quick ratio, debt to
total equity ratio, debt to total assets ratio have not significant effect
toward ROI.
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M. Rajesh et al (2011) conducted a study on impact of working
capital management on firm's profitability. This study uses nine variables,
the current ratio, acid test ratio, current assets to total assets ratio, current
assets to sales ratio, working capital turnover, inventory turnover, debtors
turnover ratio, cash turnover and ROI. The results of this study indicate
that the current ratio, working capital turnover, inventory turnover ratio
and debtors turnover ratio has positive effect on ROI. While the acid test
ratio, current assets to total assets ratio, current assets to sales ratio, cash
turnover ratio and negatively affect ROI.
Based on the description above, author is interestto use the title“
The Influence of Working Capital Management and Liquidity Toward
Profitability” (Case Study : Automotive and Component Industry listing
in Indonesia Stock Exchange 2008-2012) .
B. Problem Formulation
Based on the background that has been presented, the problem
formulation in this study are:
a. How does the influence of working capital turnover, receivable
turnover, inventory turnover, and current ratio toward profitability
(ROI) of automotive and component industry in Indonesia by
simultaneous and partial.
b. Which is the most dominant effect of independent variable (working
capital turnover, receivable turnover, inventory turnover, or current
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ratio) toward profitability (ROI) of automotive and components
company.
C. Research Objectives
Based on the problem formulation, this study aims to:
a. To analyze the influence of working capital turnover, inventories
turnover, receivable turnover, and current ratio toward the profitability
(ROI) of automotive and components industry in Indonesia by
simultaneous and partial.
b. To analyze the most dominant effect of independent variable (working
capital turnover, inventories turnover, receivable turnover, or current
ratio)toward profitability (ROI) of automotive and components
industry.
D. Benefits of Research
Based on the research of working capital management and liquidity
toward profitability at companies listed in the Indonesia Stock Exchange,
it will obtain some benefit to the parties as follows:
1. For the Companies
a. As suggestion to formulate estimate of company especially
for job which is need in a periods.
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b. As inputs for the company to use the existing working
capital as effectively and efficiently as possible to increase
the profitability of the company
2. For the Investors
The study is expected to provide information on the
importance of working capital management that affect the
company's business continuity and feasibility assessment
consideration in making investment decisions.
3. For the Academics
From this research author expects to provide the empirical
information about working capital turnover, receivable turnover,
inventory turnover, and current ratio toward profitability.
Otherwise it can be used as reference to further research.
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CHAPTER II
LITERATURE REVIEW
A. Working Capital Management
1. Definition of Working Capital
Working capital is very required to operating the company. Working
capital is the assets which is required to operating the daily for several periods.
For the example to buy raw materials, pay the employee salaries, pay the
direct labor, and pay the debt. (Kasmir, 2008 :250)
Working capital refers to a firm’s short term assets such as inventory,
and its short-term liabilities, such as money owed to suppliers. Managing the
firm’s working capital is day-to-day activity that ensures that the firm has
sufficient resources to continue its operations and avoid costly interruptions.
(Ross et al, 2010 : 4)
According to Markus (2008: 138), working capital is a short-term asset
or assets and current liabilities, such as accounts receivables, inventory, and
accounts payable when the company moves through a cycle where the raw
materials purchased, the goods are produced and sold. So called working
capital as short-term assets and liabilities.
Djarwanto (2004: 87) said that working capital is the excess of current
assets to short-term debt. This excess is called net working capital which is
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sourced from long-term debt and equity capital. The benefits of sufficient
working capital is (Djarwanto, 2004 : 87) :
a. Protect the company from the bad consequences where the value of current
assets decreased. For example the financial loss because the debtor does
not pay out, and the value of inventory decreased because the price
declined.
b. Enabling the company to pay short-term liabilities on time.
c. Enabling enterprises to be able to buy goods with cash so that they can
reap the benefits in the form of rebates.
d. Ensured the company to has credit standing so can solve unforeseeable.
e. Enabling to have sufficient supplies to serve the demand of consumers.
f. Enabling the company to give credit requirement which is profitable for
customers.
g. Enabling the company to operate more efficiently, because there is no
difficulty in obtaining raw materials, services and supplies needed.
h. Enabling the company to survive in recession and depression periods.
2. Factors Determining Amount of Working Capital
According to Jumingan (2006 : 69), the factors which is influence the
amount of working capital:
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a. General nature or type of company
Working capital of a company's services will be relatively lower
when compared with working capital requirements of the company it self,
due to service company does not require a large investment in cash,
receivables and inventories.
b. The time required to produce or obtain goods and the cost of production
per unit or price of the goods
Working capital needs of a company is directly related to the time
required to acquire the goods that will be sold as well as the basic material
to be produced until the goods are sold. The longer the time required to
manufacture or acquire such goods, the greater the working capital needed.
Terms of the purchase of materials or merchandise Terms of the
purchase of merchandise or raw materials that will be used to produce
goods greatly affect the working capital required by the company. If credit
terms are accepted at time of purchase benefits, so little cash that must be
invested in the stock of materials or merchandise or otherwise.
c. Terms of sale
The more soft loans to buyers of the company will lead to the large
amount of working capital invested in the sector accounts.
d. Inventory turnover rate
Inventory turnover rate indicates how many times inventory is
replaced in the sense that bought and resold. The higher of inventory
turnover rate is the amount of working capital required lower and will
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minimize the risk of loss due to the decline in prices or changes in
consumer taste, but it will save the cost of storage and maintenance of the
supplies.
3. Sources of Working Capital
According to Munawir (2004: 120), sources of working capital of a
company can be derived from:
a. Company's operating results, is the amount of net income that appears in
the statement of income plus depreciation and amortization, this number
indicates the amount of working capital from the operating results of the
company.
b. Profits from the sale of marketable securities
c. Sales of fixed assets, long-term investments and other assets not smooth.
d. Sale of bonds and stocks as well as contribution of funds from the owners
e. Borrowing funds from banks and other short-term loans.
f. Credit from a supplier or trade creditor
4. Use of Working Capital
According to Djarwanto (2004: 98), the use of working capital is
reduced current assets:
a. Short-term spending and short-term debt payments (including dividends
payable).
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b. Any usage prive which is from profits (on a proprietorship or partnership).
c. Loss of business or loss incidental which is required cash expulsion.
d. Establishment of a fund for a specific purpose such as pension funds, bond
debts payment, which had matured, the replacement of non-current assets.
e. Additional purchases of fixed assets, intangible assets, and long-term
investments.
5. Types of Working Capital
According to Sjahrial (2007: 104), working capital can be divided into
two types, is :
a. Permanent Working Capital
Permanent working capital is working capital that run the daily
company operations. Without a working capital has resulted in the operation
will be stop. Working capital divided by:
1. Primary working capital
The primary working capital is the minimum amount of working
capital that should be by company to ensure business continuity.
2. Normal working capital
Normal working capital is required to meet a necessary fit of
production capacity dynamically.
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b. Variable Working Capital
Variable working capital is using and always changing according to
circumstances. The changes are due to seasonal fluctuations, fluctuations
conjuncture, and changes the nature of the emergency, so the variable working
capital divided into:
1. Seasonal Working capital
Seasonal working capital is the amount of funds which is required
to anticipate when there are fluctuations in the activities of company.
2. Working capital cycle
Working capital cycle is the amount of working capital which is
their necessary influences by the conjuncture.
3. Emergency working capital
Emergency working capital is the amount of working capital needs
which is influenced by the circumstances that happen beyond the
capabilities of the company.
6. Definition of working capital management
According to Weston and Copeland (1999: 327) “Working capital
management is activities that cover all the management functions of current
assets and current liabilities which is included in the company in order to
finance spending to daily operations".
19
According to Sawir (2005: 133) "Working capital management is an
activity that includes all the functions of the management of current assets
and current liabilities of the company". Working capital management
purpose is managing current assets and current liabilities to obtain net
working capital and also to guarantee the profitability of the company.
Therefore, a manager is expected to managing of company in order to meet
working capital can be carried out effectively and efficiently. Working
capital management is also important, because it relates to some aspects, as
follows:
a. Some research has indicated that most of the time of the financial
manager is to spent by daily internal activities and this is the part of
working capital management,
b. If more than half the total assets of company are current assets as part of
a large investment and easily converted to cash, so current assets is
require the careful attention of financial managers,
c. Relationship between the rate of sales growth and the need of financial
capital also current assets are close and straight,
d. Working capital management is very important, especially for smaller
companies. Although a small company can reduce fixed asset, but they
can not avoid the need for cash, receivables and inventories. Because
access to capital markets is limited, the pressure should be directed to
debt and accounts receivable and short-term bank loans (Weston &
Copeland, 1999: 324).
20
There are two fundamental principles in the management of
operational funding working capital (Horne, 2005: 313), namely: "The
ability to earn income is inversely related to liquidity and the ability to
earn profits in line with risk". Control the exact amount of working
capital will ensure the continuity of operations of the company
efficiently and economically. When working capital is too large, then
the funds that are embedded in the working capital requirement
exceeded, resulting in idle funds, because these funds could be used for
other purposes in order to increase profits.
Targets to be achieved from working capital management is
(Sawir, 2005 : 133) :
a. Maximize the value of the company by managing current assets so
that the level of margin return on investment (return on investment)
is equal to or greater than the cost of capital used to finance the
current assets,
b. Minimize the cost of capital used to finance the current assets in the
long term,
c. Control of the flow of funds in the current assets and the availability
of funds from debt sources so that the company can always meet its
financial obligations as they fall due (Sawir.2005: 133).
21
7. Ratio of Working Capital Management
a. Working capital turnover ratio
According to Abdullah (2005: 71) "The use of working
capital management can be tested using working capital turnover
ratio is the total number of sales with current assets owned by a
company in a given period". When the volume of sales increase, so
inventories and receivables increase means that increase working
capital. Formulation of working capital turnover (WCT) :
The working capital turnover indicates the amount of net
sales dollars earned for every dollar of working capital. Of the
relationship between net sales to working capital, it can be known is
whether the company worked with high working capital or working
with low working capital.
Working capital turnover ratio is also related to the
company's liquidity. If the working capital turnover ratio is high, it
indicates low liquidity to support operations, while if the ratio is
low means high liquidity. The greater of working capital turnover
ratio show the better a company. It also shows how effective
Working capital Turnover = Sales / ( Current assets –
Current Liabilities)
22
utilization of working capital available to improve the profitability
of the company.
b. Receivable Turnover Ratio
This ratio measures the efficiency management of
receivable in company. The higher ratio shows that working capital
invested in receivables is low. Formulation of Receivable Turnover
is :
(Sugiono, 2009;73)
c. Inventory Turnover Ratio
This ratio measures the efficiency management of inventory
in company, and shows how many times the inventory can be spin
in a year. Formulation of Inventory Turnover is:
(Sugiono, 2009;73)
B. Liquidity
1. Understanding liquidity
Liquidity is one of the components to assess the financial of company.
Liquidity is the ability of a company to meet its short term obligations as they
mature (Sawir, 2001: 31). If the company is able to make payments on its
Receivable Turnover : Receivable / Sales x 100 %
Inventory Turnover : COGS / Inventory x 100 %
23
maturing obligations, meaning the company in a liquid state, and vice versa if
the company does not have the ability to make payments, meaning the
company in a state liquid that can inhibit the activity of the company's
operations and reduce its effectiveness. Liquidity can also be shown by the
size of the current assets easily converted into cash such as accounts
receivable, marketable securities and inventories.
Problem of liquidity is an important issue in a company that is
relatively difficult to solve. In view of the creditors, the company which has
high liquidity is a good company, because the funds are borrowed short-term
creditors can be guaranteed by the company's current assets. Otherwise from
the side of management, the company which has high liquidity is a bad
company due to high liquidity indicates that idle cash balances, higher
inventory, or higher trade receivables.
2. Liquidity ratio
Liquidity Ratio (Horne and Wachowicz; 2005: 205) is a ratio that
measures a company's ability to meet its short-term. This ratio compares the
short-term liabilities with short-term current resource available to meet those
obligations. Meanwhile, according to Munawir (2004 : 31) liquidity is to show
the ability of a company to meet its financial obligations to be met, or the
company's ability to meet financial obligations when billed.
24
Liquidity has always been associated with working capital that there
are two basic principles of working capital finance (Horne and Wachowicz,
2005: 313) :
a. Profitability is inversely related to liquidity
b. Profitability is directly proportional to the risk. In achieving higher
profitability should be aware that the risks faced is greater.
Horne and Wachowicz (2005: 313) declared an indication of the
greater liquidity of the company, the stronger overall financial condition, and
the growth profit of the company means that the higher level of risk that
funding is used, like as debt financing more attractive to an improvement in
liquidity.
According to Horne and Wachowicz (2005 : 207-208), liquidity ratio is
divided by :
a. Current Ratio is the total current assets divided by current liabilities
(current assets / current liabilities). Availability of cash to meet those
obligations from cash or cash conversion of current assets.
b. Quick Ratio is the current assets minus inventories divided by current
liabilities. A company that has a quick ratio of less than 1: 1 or 100% is
considered poor liquidity levels.
This study uses the current ratio. The current ratio is a ratio to measure
a company's ability to meet short-term obligations or debt immediately due at
25
the time billed as a whole. Precision current ratio according to Tunggal (2000:
155) depends on many factors, which are as follows:
a. Accepted credit terms from suppliers than with credit terms granted by the
company to the buyer,
b. The time it takes to collect receivables,
c. Inventory turnover,
d. Characteristics of the company's financial program,
e. Season of the year in question,
f. Conjuncture situation,
g. Working capital cycle length,
h. Whether the company was looking to generalize / be reduced.
The formula for the current ratio or current ratio can be used as follows:
C. Profitability
1. Understanding Profitability
Profit in operations is an important element to to ensure the survival in
the future. The company's success can be seen from the ability of the company
makes a profit, the company's ability to compete in the market, and the ability
of the company to be able to expand the business.
According to Gitman (2003: 599): "profitability is the relationship
between revenues and costs generated by using the firm's assets - both current
Current Ratio = Current Assets / Current Liabilities
26
and fixed - in productive activities". Brigham and Houston (2001: 89) said the
profitability is "the net result of a series of policies and decisions".
Second opinions concluded that profitability is ability of company to
make a profit by using available capital. Managerial performance of each
company will be able to say well if, the level of profitability of the company
that manages high or in other words the maximum, where profitability is
generally always be measured by comparing the profits from the company
with a number of estimates that a measure of success of the company. There
are several ways to measure the profitability of a company.
a. Gross profit margin (GPM)
The measurement of the percentage of any proceeds after the sale of
the company to pay the cost of goods sold. The higher gross profit margin,
the better.
b. Operating profit margin (OPM)
The measurement of the percentage of any sale proceeds leftover
after all expenses and other expenses reduced, except for interest and taxes.
c. Net profit margin (NPM)
The measurement to quantify the percentage of corporate profits
after deducting all costs of expenses including interest and taxes.
27
d. Return on investment (ROI)
The measurement of the effectiveness of management in generating
profits with the assets available.
e. Return on equity (ROE)
The measurement of return earned on investment in the company's
owners.
2. Profitability ratios
Brigham and Daves (2004: 1007) said "Profitability ratios are a group
of ratios shows that combine the effects of liquidity, asset management, and
debt on operations", which means that the profitability ratio is a ratio that
shows the group aspect of liquidity, management assets and the amount of the
company's operations are financed by debt. Horne and Wachowicz
(2005:222), explains the profitability ratio is "the ratio of earnings to connect
financial investment in enterprise IT sales". Profitability ratio is the ratio to
assess the ability of the company in search of profits and also provides a
measure of the effectiveness of a company's management.
The use of profitability ratios for the company and external companies
(Kasmir, 2008: 197) :
a. To measure or calculate the profits of company in certain period,
b. To assess the position of the profit in periods
c. To assess the development of earnings over time,
28
d. To assess the magnitude of the net profit after tax to equity capital,
e. To assess the productivity of all funds used by the firm's own money.
This study uses the ratio of Return On Investment (ROI). Analysis
Return On Investment (ROI) in financial analysis has particular significance as
one of the techniques of financial analysis that is thorough / comprehensive.
Analysis of return on investment has been a common technique used
by management to measure the effectiveness of the overall operation of the
company. Return On Investment (ROI) itself is a form of profitability ratios
are intended to measure the overall ability of the company with funds invested
in assets used for the company's operations in order to generate profits.
(Kasmir, 2008: 197)
Return On Investment connects the benefits of the company's
operationsby the number of investments or assets (Net Operating Assets)
which is used to generate the operating profit (Munawir, 2004: 89). The higher
ratio means that the position of the owner company is stronger and vice versa.
The greater value of the Return On Investment is better, because it means the
company can generate high profits by using total assets. Formulation of Return
On Investment (ROI) that is :
ROI = Net Operating Income / Total Assets
29
D. Previous Research
Deloof (2003) investigated the relationship between working capital
management and corporate profitability for a sample of 1,009 large Belgian
non-financial firms for the 1992-1996 periods The result from analysis showed
that there was a negative relationship between variables cash conversion cycle
as well number of day’s accounts receivable and inventories toward gross
operating income.He suggested that managers can increase corporate
profitability by reducing the number of day’s accounts receivable and
inventories. Less profitable firms waited longer to pay their bills.
Singh and Pandey (2008) had an attempt to study the working capital
components and the impact of working capital management on profitability of
Hindalco Industries Limited for period from 1990 to 2007. Results of the
study showed that current ratio, liquid ratio, receivables turnover ratio and
working capital to total assets ratio had statistically significant impact on the
profitability of Hindalco Industries Limited.
Lazaridis and Tryfonidis (2006) have investigated relationship between
working capital management and corporate profitability of listed company in
the Athens Stock Exchange. A sample of 131 listed companies for period of
2001-2004 was used to examine this relationship. The result from regression
analysis indicated that there was a statistical significance between profitability,
measured through gross operating profit, and the cash conversion cycle. From
those results, they claimed that the managers could create value for
30
shareholders by handling correctly the cash conversion cycle and keeping each
different component to an optimum level.
Raheman and Nasr (2007) have selected a sample of 94 Pakistani firms
listed on Karachi Stock Exchange for a period of 6 years from 1999-2004 to
study the effect of different variables of working capital management on the
net operating profitability. From result of study, they showed that there was a
negative relationship between variables of working capital management
including the average collection period, inventory turnover in days, average
collection period, cash conversion cycle and profitability. Besides, they also
indicated that size of the firm, measured by natural logarithm of sales, and
profitability had a positive relationship.
Finally, Afza et al (2009) made an attempt in order to investigate the
traditional relationship between working capital management policies and a
firm’s profitability for a sample of 204 non-financial firms listed on Karachi
Stock Exchange (KSE) for the period 1998-2005.The study found significant
different among their working capital requirements and financing policies
across different industries. Moreover, regression result found a negative
relationship between the profitability of firms and degree of aggressiveness of
working capital investment and financing policies. They suggested that
managers could crease value if they adopt a conservative approach towards
working capital investment and working capital financing policies.
Christopher et al (2009) investigated a sample of 14 corporate hospitals
in India using panel data analysis for the period 96/97 to 2005/06. The
31
independent variables used were current ratio, quick ratio, inventory turnover
ratio, working capital turnover ratio, debtor´s turnover ratio, ratio of current
asset to total asset, ratio of current asset to operating income, comprehensive
liquidity índex, net liquid balance size, leverage and growth. The dependent
variable profitability is measured in terms of return on investment ROI. From
multiple regression analysis, negative association with ROI can be seen in
current ratio, cash turnover ratio, current asset to operating income and
leverage. On the other hand, positive association with ROI are in quick ratio,
debtor´s turnover ratio, current asset to total asset and growth rate. Conclusion
is that hospitals should concentrate more on efficient use of working capital
for increasing the profitability which would increase the value of hospitals.
Anggarini (2009) in PT Perkebunan Nusantara II (Persero) Tanjung
Morawa in the period 2004-2008. The independent variables used were
current ratio, quick ratio, debt to total equity ratio, and debt to total assets
ratio. The dependent variable that is used in this research is Return on
Investment. The result is current ratio has positive significant effect toward
ROI. While quick ratio, debt to total equity ratio, debt to total assets ratio have
no significant effect toward ROI.
M. Rajesh and N.R.V. Ramana Reddy (2011) conducted a study on
impact of working capital management on firm's profitability. This study uses
nine variables, the current ratio, acid test ratio, current assets to total assets
ratio, current assets to sales ratio, working capital turnover, inventory
turnover, debtors turnover ratio, cash turnover, and ROI. The results of this
32
study indicate that the current ratio, working capital turnover, inventory
turnover ratio and debtors turnover ratio has positive effect on ROI. While the
acid test ratio, current assets to total assets ratio, current assets to sales ratio,
cash turnover ratio and negative effect toward ROI.
33
Table 2.1
Overview Previous Research
No Researcher Variable Analysis
Methods Result
1. Deloof
(2003)
Gross Operating
Income, Cash
Conversion Cycle,
Regression
Analysis
There was a negative
between profitability
that was measured
by gross operating
income and cash
conversion cycle as
well number of
day’s accounts
receivable and
inventories
2. Sing and
Pandey
(2008)
Current ratio, liquid
ratio, receivables
turnover ratio and
working capital to
total assets ratio,
profitability
Regression
Analysis
Current ratio, liquid
ratio, receivables
turnover ratio and
working capital to
total assets ratio had
statistically
significant impact on
the profitability
3. Lazaridis
and
Tryfonidis
(2006)
Days of account
receivables, days of
inventory, days of
account payable,
cash conversion
cycle, fixed
financial ratio,
fixed debt ratio, and
gross operating
profit
Regression
Analysis
There was a
statistical
significance between
profitability,
measured through
gross operating
profit, and the cash
conversion cycle
4. Raheman
and Nasr
(2007)
Average collection
period, Inventory
turnover in days,
average collection
period, cash
conversion cycle
and profitability
Regression
Analysis
There was a negative
relationship between
variables of working
capital management
including the
average collection
period, inventory
turnover in days,
average collection
period, cash
conversion cycle and
profitability
34
No Researcher Variable Analysis
Methods Result
5. Afza and
Nazir
(2009)
Operating cycle,
operating cash
flows, leverage,
size, ROA, Tobin’s
q and growth as
internal
company-related
factors, and
Industry dummy
and level of
economic activity
as external
Regression
Analysis
Result found a
negative relationship
between the
profitability of firms
and degree of
aggressiveness of
working capital
investment and
financing policies
6. Christopher
and
Kamalavalli
(2009)
Current ratio, quick
ratio, inventory
turnover ratio,
working capital
turnover ratio,
debtor´s turnover
ratio, ratio of
current asset to total
asset, ratio of
current asset to
operating income,
comprehensive
liquidity index, net
liquid balance size,
leverage and
growth, ROI
Multiple
Regression
Analysis
Negative association
with ROI can be
seen in current ratio,
cash turnover ratio,
current asset to
operating income
and leverage. On the
other hand, positive
association with ROI
are in quick ratio,
debtor´s turnover
ratio, current asset to
total asset and
growth rate.
7.
Hilda
Anggarini
(2009)
Current ratio, Quick
ratio, Debt to total
equity ratio, Debt to
total asset ratio
Regression
Analysis
Current ratio has a
positive significant
effect on ROI. While
quick ratio, debt to
total equity ratio,
debt to total assets
ratio have a no
significant effect
toward ROI
8. M. Rajesh
and N.R.V.
Ramana
Reddy
(2011)
Current ratio, acid
test ratio, current
assets to total assets
ratio, current assets
to sales ratio,
working capital
Multiple
Regression
Analysis
Current ratio,
working capital
turnover, inventory
turnover, debtors
turnover ratio
significant effect on
35
No Researcher Variable Analysis
Methods Result
turnover, inventory
turnover, debtors
turnover ratio, cash
turnover, ROI
Multiple
Regression
Analysis
ROI. While the acid
test ratio, current
assets to total assets
ratio, current assets
to sales ratio and
cash turnover effect
negative impact on
ROI
36
E. Logical Framework
Figure 2.1
Logical Framework
Based on the logical framework, it appears that the relationship
between the independent variables and the dependent variable is the
causative relationship (cause and effect). Where the determined
independent variable are working capital turnover (X1), inventories
turnover (X2), receivables turnover (X3), and liquidity (X4) will affect the
Financial Statement of Firm
Profitability
Return on Investment Ratio
Assumption Classic
TestTTeTest
Multiple Linear Regression Test
Conclusion and Recommendation
Working Capital Management
and Liquidity
1. Working capital turnover
2. Inventories turnover ratio,
3. Receivable turnover ratio.
4. Current ratio
37
profitability as the dependent variable (Y).Working capital used to operate
of activities daily company, therefore, necessary to have a control over the
sources and uses of working capital that is made in the form of a statement
of changes in working capital. Supervision of the sources and uses of
working capital essential for companies if the owner of company want to
maintain the continuity of the company.
Corporate profitability is the ratio between the net income or
capital assets used to generate those profits. Profitability is also affected by
the company's liquidity problems. Liquidity is a company's ability to meet
its short term obligations that have matured. More and more companies
hold money cash, the more liquid the company is, and the less cash used
by companies, occasionally liquidity will be felt as a result of which the
company can reduce the chances of harm and benefit fatherly. When a
company in the liquid state, it is possible the company could not take
advantage of discount (credit purchases or cash). As a result, the company
operated at a high cost, and it can reduce the opportunity for companies to
achieve greater profits. Company that is able to meet its financial
obligations in a timely manner means the company is in a state of "liquid",
meaning that the company has the means of payment or current assets are
greater than current liabilities. Companies that are just looking for profit
without regard to the company's liquidity will eventually run into "liquid"
if at any time there is a charge.
38
According to Horne (2005: 224) " If the company knows for
certain future sales demand, collection of accounts receivable and
production schedules, then the company can manage its debt maturity
schedule associated with the timing of net cash flows in the future, the
result will be the maximum profit, because there is no need to store
assets”.
F. Hypothesis
The hypothesis of this study concerned whether there is a
significant effect of the independent variables to the dependent variable
simultaneously or partially. This study tested the following hypothesis:
1.Ho :b1, b2, b3, b4,=0 ; There is no effect between variables
working capital turnover, accounts
receivable turnover, inventory turnover
and current ratio toward return on
investment with a simultaneously
Ha : b1, b2, b3, b4,≠0 ; There is a effect with a simultaneous
between variable working capital
turnover, accounts receivable turnover,
inventory turnover and current ratio
toward return on investment.
2.Ho :b1= 0 ; There is no significant effect of working
capital turnover ratio toward return on
39
investment.
Ha :b1 ≠ 0 ; There is a positive effect of working
capital turnover ratio toward return on
investment
3. Ho :b2= 0 ; There is no significant effect of receivable
turnover ratio toward return on investment
Ha :b2 ≠0 ; There is a negative effect of receivable
turnover ratio toward return on investment
4. Ho :b3= 0 ; There is no significant effect of inventory
turnover ratio toward Return on
Investment
Ha :b3 ≠0 ; There is a positive effect of inventory
turnover ratio toward return on investment
5. Ho :b4= 0 ; There is no significant effect of current
ratio toward return on investment
Ha :b4 ≠0 ; There is a positive effect of current ratio
toward return on investment
40
CHAPTER III
RESEARCH METHODOLOGY
A. Scope of Research
This research uses quantitative method by using Microsoft Excel and
SPSS 20.0 application. The research design or relationship between variables
uses association causality. Causality is a type of relationship, which can be
seen from the characteristics of the relationship between independent and
dependent variables, if the dependent variable explained or influenced by
independent variables, it can be stated that variable X cause variable Y
(Indriantoro and Supomo,2009).
The scope of the research is the annual report of automotive and
components listed in Indonesian Stock Exchange (IDX) within 2008-2012.
This research will examine the influence of working capital management and
liquidity towards profitability.
B. Sampling Method
Sampling method is kind of method taken from population data.
Sample is a part of number population. Research will not take all the
populations, because due to limited funds, man power and time. So, sample
can represents the population (Sugiyono,2009). Researcher uses non-
probability sampling are elements of the population does not have the same
chance to selectas a sample(Sugiyono,2009).
41
This research conduct by purposive sampling method. Purposive
sampling is divided into two types, quota sampling and judgmental sampling.
In this research, researcher will use judgmental sampling as sampling method.
In judgmental sampling, subjects selected on the basis of their expertise in the
subject investigated (Indriantoro et al, 2009). The research data are taken
from annual report of manufacturing company in the sector of automotive and
components listed in Indonesia Stock Exchange (IDX). The reason why the
researcher chooses manufacturing company as a research object because
manufacturing company is the largest company’s sector listed in IDX.
Besides that, in automotive and component industry is one of the sectors most
substantial investment growth in 2012. So that, it is good to choose this sector
as research sample because most of company’s substantial investment growth
in 2012.
Regarding to the population in this research must meet the following
criteria :
1. Manufacturing company in the sector of automotive and
components listed in IDX during period of 2008-2012.
2. The company has published annual report in period 2008-2012.
3. The company has the data of working capital turnover, inventories
turnover, receivables turnover, current ratio, financial ratio in
detail that will be tested in its annual report.
42
Based on these criteria the obtained samples are 12 automotive and
components companies in the period 2008-2012 in Indonesia Stock
Exchange :
Table 3.1
List of Sample
No Code Company
1. ASII Astra International Tbk
2. AUTO Astra Otoparts Tbk
3. GJTL Gajah Tunggal Tbk
4. GDYR Goodyear Indonesia Tbk
5. BRAM Indo Kordsa Tbk
6. IMAS Indomobil Sukses International Tbk
7. INDS IndospringTbk
8. LPIN Multi Prima Sejahtera Tbk
9. MASA Multistrada ArahSarana Tbk
10. NIPS Nipress Tbk
11. PRAS Prima Alloy Steel Tbk
12. SMSM Selamat Sempurna Tbk
Sources: idx.co.id
C. Data Collection Method
The research uses secondary data. The type of data obtained through
research literature which provide theoretical basis and frame of mind to
support primary data, as well as to support problem identification discussion
(Indriantoro et al, 2009). Secondary data refer to information gathered from
sources that already exist (Uma Sekaran and Roger Bougie, 2010). This
research data will be acquired from reports on the company’s website, annual
reports of company or the media reports.
43
Secondary data used in this study are the annual report of automotive
and components industry companies listed on the Indonesia Stock Exchange
in 2008-2012. Data obtained from the Indonesian, www.idx.co.id, Capital
Market Reference Center (CMRC) at the Indonesia Stock Exchange (IDX),
companies’ website and www.yahoofinance.com.
D. Data Analyze Method
The method of analysis data in this research is using statistical
calculations, the name of application is SPSS (Statistical Product and Service
Solutions) 20.0 for windows. Once the necessary data collected in this study,
and then performed the data analysis consisted of descriptive statistical
methods and test hypotheses :
1. Descriptive Statistic
The data in this study were analyzed with descriptive statistics.
Descriptive statistical testing in this research basically is a process
transformation research data in a form of tabulation in order that can be
easier to be understood and interpreted. Tabulation in generally is used by
researcher to obtain information about characteristics of primary variable
in research. The measurement applied in this descriptive statistical testing
depends on the type of scale of measurement. The descriptive statistical
testing obtains a picture or describes data that can be seen from median,
mean, mode, standard deviation, variance, maximum and minimum.
44
2. Classical Test Assumption
a. Normality Test
According to Zulkifli Matondang (2009), normality tests are
conducted in purpose to detect whether a set of data will be used as basic
start to test hypothesis is empirical data that meets the naturalistic nature.
Naturalistic nature is a thought that phenomena (symptoms) occur in this
nature are natural and patterned. Widhiarso (2009) said that normality
tests are some tests to measure whether our set of data having normality
distribution so it can be used in parametric statistic. Tests of normality
become important because this is a parametric test and have to normal
distributed (Haryadi and Winda, 2011). So, normality tests are some kind
of tests to clarify whether the data obtained are normally distributed and,
importantly, represent the whole population or not.
Researcher choose two tools to test whether the data is
distributed normally or not.
1) GraphAnalysis
According to Ghozali (2006) normality test can use
histogram graph by seeing the form of curve in the graph Normal
Probability Plot(P-P Plot)namely with see at the spread of the
data (dots) on the diagonal axis from the normal chart. Basic for
decision-making are:
45
a) For histogram graph, if the curve make a form of bell around
the chart, so the regression model meet the normality
assumption
b) For Normal Probability Plot(P-P Plot), if the data spread
around the diagonal line and follow the direction of the
diagonal line, so the regression model meet the normality
assumption.
2) Statistical Analysis
Researcher uses tools of Lilliefors (Kolmogorov-
Smirnov) because Haryadi and Winda (2011) suggested that if
data of testing are more than 50 (i.e. respondents are more than 50
people) then use Lilliefors (Kolmogorov- Smirnov) test. Criteria
for Lilliefors (Kolmogorov- Smirnov) test are:
a) Number of Kolmogorov- Smirnov significance Sig. > 0.05,
indicates the data normally distributed.
b) Number of Kolmogorov- Smirnov significance Sig. < 0.05,
indicates the data are not normally distributed
(NovitaItalianiKatsuri, 2011).
b. Multicollinearity Test
Multicollinearity test aims to test whether the regression model
found a correlation between the independent variables(Ghozali,
2009:95). A good regression model should not correlate between the
independent variables. To detect the presence or absence of
46
multicollinearity in the regression model can be seen from the value of
tolerance and the variance inflation factor (VIF). Multicollinearity
views of the tolerance value > 0.10 or VIF < 10. Both of these
measurements indicate each independent variable which is explained
by the other independent variables.
c. Autocorrelation Test
Autocorrelation is correlation between observed members
arranged in time series (if the data used is time series data) or
correlation among four contiguous variables (Andriyatno, 2010).
Diagnose the autocorrelation done through testing to test the value of
Durbin Watson (DW test) by (Ghozali2009:100).Here the criteria for
testing autocorrelation.
1) If 0<Dw< DL there is any positive autocorrelation.
2) If DL <Dw< Du or 4-Du < D < 4-DL uncertain conclusion.
3) If 0 <Dw< DL or Du <Dw< 4-Du there is no autocorrelation.
4) If 4-DL <Dw< 4 there is any negative autocorrelation.
d. Heteroscedasticity Test
According to Ghozali (2009), the aim of heteroscedasticity test
is to test whether the regression model occur the variance inequality of
the residual from one observation to another observation. If the
variance from residual of one observation to other observations is
fixed, it is called homocedasticity andif it different called
heteroscedasticity. A good regression model is homocesdasticity or
47
there is no heteroscedasticity. In this study, heteroskedastisity test can
be viewed with using the chart Scatterplot between the predicted value
of dependent variable (ZPRED) and residual (SRESID). Y-axis
becomes the axis that has been predicted and the X axis is the residual
(Y predicted-Y actually) that has been in the studentized. Basic for
decision-making are as follows:
1) If there is a certain pattern, like dots that are forming a regular
pattern(wavy, widening and then narrow), then it indicates that
there is heteroscedasticity.
2) If there is no clear pattern, as well as the dots spread above and
below zero (0) on the Y axis, then it indicates that there is no
heteroscedasticity or homocedasticity.
3. Hypothesis Testing
a. Multiple Regression Analysis
Multiple regression analysis is used to test the effect of two or
more independent variables toward the dependent variable (Ghozali,
2006). Regression analysis divided into two kinds, simple regression
analysis (if there is only one independent variable) and multiple
regression analysis (if there are more than one independent variables).
Multiple regression analysis can be measured partially (indicated by
coefficient of partial regression) jointly indicated by coefficient of
multiple determination or R2 (Indriantoro and Supomo, 2009).
48
This research will show us about the influence of independent
variables, working capital turnover (X1), inventories turnover
(X2),receivables turnover (X3), current ratio (X4) toward dependent
variable, Return on Investment (Y). The form of multiple linear
regression equation as follows:
Where: Y = Return on Investment
X1 = Working Capital Turnover
X2 = Receivables Turnover
X3 = Inventories Turnover
X4 = Current Ratio
bi = Coefficient of Regression Variable
b. Simultaneous Significance Test ( F- Test)
Essentially, F-test has purpose to know whether among
independent variables simultaneously have significant influence toward
dependent variable. Independent variables in this research working
capital turnover, inventories turnover, receivables turnover and current
ratio whereas dependent variable is ROI. So, F-test has function to
know the influence among working capital management and liquidity
towards profitability (ROI). α used for this research is 0.05 ( 5%) with
assumption:
Y = b0 + b1X1 + b2X2 + b3X3 + b4X4 +e
49
1.) Ftest<Ftable, independent variables simultaneously not influence
towards dependent variable or hypothesis is rejected.
2.) Ftest>Ftable, independent variables simultaneously influence
significantly towards dependent variables or hypothesis is
accepted.
c. Partial Significance Test ( T - Test)
Partial Significance Test or t- test basically has purpose to know
how far and how much the influence independent variables toward
dependent variables. In this research, t- test is done to know the
influence of working capital turnover, receivable turnover, inventory
turnover, and current ratio as independent variables towards
profitability (ROI) as dependent variable.
Assumption used for this test are if the significance value of t
more than α (significance value > α), so H0= accepted and H1 = rejected
but if on contrary the significance value of t less than α (significance
value < α), so H0= rejected and H1 = accepted. Level of significance (α)
use in this research is 0.01 (1%), 0.05 (5%), and 0.10 (10%)
d. Coefficient of Determination Test ( R2)
According to Wihandaru S. P., coefficient of determination test
is used to measure proportion of dependent variable variance which is
explained by independent variable. The value of R Square is between
zero and one. If the value close to one means that independent variable
50
gives almost all the information needed to predict the variation in the
dependent variable (Ghozali, 2009).
E. Variable Operational Research
Variable operational research is a concept that had variation point
applied in a research and meant to ensure, so variable that wanted to be
researched clearly could be seen. As for variable that is meant as follows:
1. Independent Variable
The independent variable is the type of variables that explain or
influence another variable or variables suspected as the cause of the
dependent variable (Indriantoro and Supomo, 2009). The independent
variables used are:
a. Working Capital Turnover
The sales of the current assets minus current liabilities
b. Inventory Turnover
The cost of good sold by the average of inventory
Working capital Turnover = Sales / ( Current assets –
Current Liabilities)
Inventory Turnover = COGS / Inventories x 100 %
51
c. Receivable Turnover
The receivables divided by sales
d. Liquidity (Current Ratio)
Current assets divided by current liabilities
2. Dependent Variable
Dependent variable is type of variables that explained or
influenced by other variables or variable expected as a result of the
independent variable (Indriantoro and Supomo, 2009). Dependent
variable used in this research is ROI.
Return On Investment (ROI) is one of the profitability ratios
are intended to measure the ability of companies with total funds
invested in assets that are used for the operation of the company to
generate profits. Return on investment can be formulated as follows
(Munawir, 2004):
Receivable Turnover = Receivables / Sales x 100%
Current Ratio = Current Assets / Current Liabilities
ROI = Net Operating Income / Total Assets
52
CHAPTER IV
FINDING AND ANALYSIS
A. General Description of Research Object
National automotive industry is one of the Indonesian economic
driving. The automotive industry has begun manufacturing value chain
components, manufacturing the vehicle itself, the distribution network and
after-sales service, both official and public workshops, including network
sales of spare parts throughout Indonesia. In addition, the industry also
develop supporting industries such as finance and insurance. Thus the
chain of the automotive industry is also creating opportunities tremendous
work for the community. Based on data GAIKINDO, the automotive
industry is the fourth rank contributors to the tax. Furthermore, the rapid
development of the national automotive industry will attract foreign
investors to participate in developing its business in Indonesia. Automotive
and Components number of companies listed in the Indonesia Stock
Exchange period 2008-2012 amounted to 12 companies. But companies
are still listed and issued financial statements amounted to only 12
companies. Here is the company profile Automotive and Components in
brief:
1. PT. Astra International Tbk. (ASII)
PT Astra International Tbk, known as the Astra Group is one of the
largest business groups in Indonesia, established since the 20th
February
1957. The company has been listed on the Jakarta Stock Exchange since
53
April 4th
, 1990. Currently the majority of its shares owned by Singapore's
Jardine Cycle & Carriage. In 1957, PT Astra International was founded. In
1965 the company began importing heavy equipment and cars from the
United States. 1969 Astra then became the sole distributor of Toyota cars
in Indonesia. Astra was appointed as the sole distributor of Honda Motor
and copy machine Xerox in Indonesia in 1970. Astra International 1990
listed in the Jakarta Stock Exchange and Surabaya Stock Exchange. Then
in 2005 Toyota Astra Finance was established to support the financing of
the Toyota brand.
2. PT. Astra Otoparts. (AUTO)
Astra Otoparts established in 1976 which is a leading group of
companies engaged in the manufacturing and distribution automotive
components, serving the market: the domestic automotive manufacturers,
parts replacement, and export (mostly to Asia Oceania, Middle East, and
Africa). As a group of leading companies, Astra Otoparts always improve
capabilities in the field of manufacturing technology through cooperation
strategic (strategic joint ventures) as well as technical assistance agreement
with the companies manufacturing components from Japan and Europe.
Products production subsidiaries have been widely used / assembled by the
manufacturer of cars and motorcycles, such as Toyota, Daihatsu, Isuzu,
Mitsubishi, Suzuki, Honda, Yamaha, and Kawasaki, Hino. In 1998, Astra
Otoparts has been listed in the Jakarta Stock Exchange.
54
3. PT. Gajah Tunggal Tbk. (GJTL)
Established in 1951, PT. Gajah Tunggal Tbk. start production tires
with a bicycle tire. The company has since grown into a manufacturer the
largest integrated tire in Southeast by making a variety of products through
the production of motorcycle tires in 1971,followed by bias tires for
passenger cars and commercial in 1981. Early90s, the company began
manufacture radial tires for cars passenger and truck. PT Gajah Tunggal
Tbk listed in the Stock Exchange Jakarta and Surabaya in 1990.
4. PT.Goodyear Indonesia Tbk. (GDYR)
PT Goodyear Indonesia is the first tire company and the oldest in
Indonesia, which was founded in 1935 on an area of 172,000 of
greenery in the city of Bogor. GDYR was one of the first companies listed
on the Jakarta Stock Exchange in 1980. Since 1935, Goodyear became a
pioneer for the development of the tire industry in Indonesia, and provide
technical support in the establishment of PT Intirub (Indonesian Tire &
Rubber Company). It also contributed to the technology industry by
forming a bead wire for PT Indocordsa Tbk.
5. PT.IndoKordsa Tbk. (BRAM)
PT Indocordsa Tbk is the Indonesia-based tire thread cable and
fabric manufacturers. Indocordsa engaged in the manufacture and
distribution of tire cord fabric, nylon yarn and polyester yarn. On
December 31th
, 2009, Indocordsa subsidiaries are PT Indocordsa Polyester
and Thailand Indocordsa Co.
55
6. PT. Indomobil Sukses Internasional Tbk. (IMAS)
PT Indomobil Sukses International is an integrated business group
applying the concept of one-stop service which has several subsidiaries
engaged in the automotive field in Indonesia. The Company was founded
in 1976 under the name PT. Indomobil Investment Corporation and in
1997 was the merger with PT. Indomulti Inti IndustriTbk. Since then the
company changed to the status of a public company under the name of PT.
Indomobil Sukses Internasional Tbk, with its headquarters in Wisma
Indomobil East Jakarta. The main business areas of the company and its
subsidiaries include: brand licensees, distributors vehicle sales, after-sales
service, motor vehicle assembly, automotive component manufacturers,
and distributors of spare parts. In addition, to assist consumers in meeting
the needs of the vehicle, the Company and its subsidiaries also offer auto
financing services, distribution of lubricating oils and other supporting
business group.
7. PT. Indospring Tbk. (INDS)
PT Indospring Tbk is a manufacturing company in Indonesia which
was established in 1958. This produces spare parts for vehicles motor,
including leaf springs and coil springs. It has three business segments are
leaf springs, coil springs and a flat bar. The Company's subsidiary, PT
Indobaja Prima murni, engaged in manufacturing rolling mill, producing a
flat metal sheet, steel reinforced concrete, steel elbows and other related
products.
56
8. PT.Multi Prima Sejahtera Tbk. (LPIN)
PT. Enterprises Lippo Tbk. established on January 7th
, 1982. In
June 27th
, 2001 a change in corporate name is PT. Multi Prima Sejahtera
Tbk. Line of Business includes manufacturing spark plugs and automobile
parts, trade goods of own production or a related company, investments in
companies or other legal entities. The Company started commercial
operations in 1987 with the main production automobile spark plugs and
lights.
9. PT.Multisrada Arah Sarana Tbk. (MASA)
PT Multistrada Arah SaranaTbk (MASA) is a manufacturer of
vehicle tires four wheel brand Achilles, Corsa and Strada. MASA is fully
committed to provide the best service and products of high quality for the
customers, by not using substandard raw materials, not to produce and
deliver a product that does not meet quality standards.
10. PT. Nipress Tbk. (NIPS)
Nipress founded in November 1970. Nipress manufactures the
widest range of products car batteries, motorcycle batteries, golf cart
batteries, and motive power batteries. And to this day is the only public
company for lead acid battery manufacturer in Indonesia since 1991 on a
stock trading at the Jakarta Stock Exchange.
57
11. PT.Prima Alloy Steel Tbk. (PRAS)
The company was founded in February 1984 and located in
Sidoarjo. The company’s factory is located 60.000 , employs 800
people, and capable of producing 1.2 million pieces wheels annually make
the company grow into a major manufacturer of automotive wheels and
known by quality, style, and service and also has been recognized by the
international quality standards such as TUV, JWL Japan and ISO
9001. Approximately 95% are exported to USA, Canada, Europe,
Germany, Japan, Australia, Middle East, South Africa, Asian countries,
South and Central America.
12. PT Selamat Sempurna Tbk (SMSM)
PT. Selamat Sempurna Tbk is the flagship of the ADR Group and
was founded in 1973. It is currently one of the largest manufacturers of
filters and radiators in the region. The company manufactures filters,
radiators, condensers, brake and fuel pipes, fuel tank, exhaust system and
press section. PT Selamat Sempurna Tbk became a public company in
1996, and now listed on the Indonesia Stock Exchange. In 2006 the
Company merged with PT Andhi Chandra Automotive Products Tbk.
58
B. Analysis and Discussion
1.Descriptive Data
This analysis is used to describe the data obtained by sampling
method used was purposive sampling. Data processing was performed using
Microsoft Excel and SPSS for Windows 20.00 to accelerate data acquisition.
From the results of data processing carried out can be explained on the
variables contained in the regression models.
Based on the data obtained are expected to know how to influence
the variables of working capital on profitability in the company's
Automotive and Components listed at the Indonesia Stock Exchange in
2008-2012. In this case the data obtained from the financial statements for
five years (2008-2012) of the Automotive and Components 12 companies
listed at Indonesia Stock Exchange. The description of each variable is as
follows:
a. Analysis of Return on Investment
Return on Investment demonstrate the company's ability to
generate profits from assets that were used. By using this ratio, it can be
seen whether the company efficient in utilizing its assets in the company's
operations. This ratio also gives a better measure of the profitability of the
company as it shows the effectiveness of management in the use of assets
to earn income.
59
Table.4.1
Return on Investment
EMITEN 2008 2009 2010 2011 2012 AVERAGE
ASII 11.38 11.29 12.73 13.91 12.32 12.33
AUTO 14.22 16.54 20.44 15.88 12.12 15.84
GJTL -7.17 10.20 8.01 8.19 5.55 4.95
GDYR 0.08 10.74 5.81 3.14 4.65 4.88
BRAM 5.67 5.34 8.99 3.31 7.93 6.25
IMAS 0.41 2.31 5.62 8.26 3.12 3.94
INDS 3.47 9.46 9.23 10.57 30.96 12.74
LPIN 2.60 7.40 9.36 7.19 8.22 6.95
MASA 0.13 6.89 5.80 3.01 0.20 3.21
NIPS 0.48 1.17 3.74 3.99 3.40 2.56
PRAS -2.67 -8.61 0.32 0.94 0.53 -1.90
SMSM 9.84 14.11 14.10 19.29 3.61 12.19 Source : data processed
As seen above in Table 4.1 The highest of return on investment
value in 2008 obtained by PT Astra Autoparts Tbk (AUTO) amount 14.22.
It shows the company ability to generate profits in the use of its assets.
While the lowest value obtained by PT Gajah Tunggal Tbk (GJTL)
amount -7.17.It means -7.17% loss obtained by the company’s from the
sales. The high losses of this company show that the company’s
management is very poor and unable to generate profits for the company.
This company advised to improve the performance of income.
In 2009, the highest of return on investment value obtained by PT
Astra Otoparts Tbk (AUTO) amount 16.54. This means 16.54%
investment rate of return earned on the sales as company profits. While the
lowest value obtained PT Prima Alloy Steel Tbk (PRAS) amount -8.61. It
means -8.61% loss of profits obtained by the company sales. Losses
60
suffered by the company shows that company management is less effective
in generating profits.
In 2010, the highest of return on investment value obtained by PT
Astra Otoparts Tbk (AUTO) amount 20.44. This means 20.44% rate of
return investment earned on the sales as company profits. While the lowest
value obtained PT Prima Alloy Steel Tbk (PRAS) amount 0.32. It means
0.32% loss of profits obtained by the company sales. Losses suffered by
the company shows that company management is less effective in
generating profits.
In 2011, the highest of return on investment value obtained by PT
Selamat Sempurna Tbk (SMSM) amount 19.29. This means 19.29% rate
of return investment earned on the sales as company profits. While the
lowest value obtained PT Prima Alloy Steel Tbk (PRAS) amount 0.94. It
means 0.94% loss of profits obtained by the company sales. Losses
suffered by the company shows that company management is less effective
in generating profits.
In 2012, the highest of return on investment value obtained by PT
Indospring Tbk (INDS) amount 30.96. This means 30.96 % investment
rate of return earned on the sales as company profits. While the lowest
value obtained PT Multistrada Arah SaranaTbk (MASA) amount 0.20. It
means 0.20 % loss of profits obtained by the company sales. Losses
suffered by the company shows that company management is less effective
in generating profits.
61
b. Analysis of Working Capital Turnover
Working Capital Turnover is the ratio of working capital, which
shows the number of sales that can be obtained for any working capital
(Sawir, 2003: 16).The shorter period of turnover means that the faster of
working capital turnover, and also the company makes a profit when the
sales occurred.
Table 4.2
Working Capital Turnover
Source :data processed
As seen above in Table 4.2 the highest of working capital turnover
in 2008 obtained by Prima Alloy Steel Tbk (PRAS) amount 127.94. It
shows working capital turnover in one year amounted to 127.94 It means
that firms use working capital effectively. So the company will earn a
satisfactory profit. While the lowest value obtained by PT Indomobil
Sukses International Tbk (IMAS) amount -26.39.It shows the working
capital turnover within one year of -26.39. It means the firms use working
EMITEN 2008 2009 2010 2011 2012 AVERAGE
ASII 11.22 9.99 13.37 9.23 8.70 10.50
AUTO 5.39 4.58 6.60 10.96 18.24 9.15
GJTL 8.18 3.89 5.08 5.45 5.05 5.53
GDYR 8.52 -30.82 -21.15 -18.45 -22.44 -16.87
BRAM 3.08 3.23 4.15 3.84 2.61 3.38
IMAS -26.39 -34.32 37.37 7.92 11.47 -0.79
INDS 20.22 8.15 8.69 2.66 2.35 8.41
LPIN 2.02 1.09 0.98 0.94 0.64 1.13
MASA -18.22 -14.04 -6.13 -2.11 4.30 -7.24
NIPS 78.38 -219.72 133.45 28.20 14.25 6.91
PRAS 127.94 1.31 1.36 11.06 4.86 29.31
SMSM 5.42 6.46 4.37 3.98 1.22 4.29
62
capital is not effective. So the company suffered losses and the company
should improve performance in managing working capital.
In 2009, the highest of working capital turnover obtained by PT
Astra International Tbk (ASII) amount 9.99. It shows working capital
turnover in one year amounted to 9.99. It means that firms use working
capital effectively. So the company will earn a satisfactory profit. While
the lowest value obtained by PT Nipress Tbk (NIPS) amount -219.72.It
shows the working capital turnover within one year of -219.72. It means
the firms use working capital is not effective. So the company suffered
losses and the company should improve performance in managing working
capital.
In 2010, the highest of working capital turnover obtained by PT
Nipress Tbk (NIPS) amount 133.45. It shows working capital turnover in
one year amounted to 133.45. It means that firms use working capital
effectively. So the company will earn a satisfactory profit. While the
lowest value obtained by PT Goodyear Indonesia Tbk (GDYR) amount -
21.15. It shows the working capital turnover within one year of -21.15. It
means the firms use working capital is not effective. So the company
suffered losses and the company should improve performance in managing
working capital.
In 2011, the highest of working capital turnover obtained by PT
Nipress Tbk (NIPS) amount 28.20. It shows working capital turnover in
one year amounted to 28.20. It means that firms use working capital
63
effectively. So the company will earn a satisfactory profit. While the
lowest value obtained by PT Goodyear Indonesia Tbk (GDYR) amount -
18.45.It shows the working capital turnover within one year of -18.45. It
means the firms use working capital is not effective. So the company
suffered losses and the company should improve performance in managing
working capital.
In 2012, the highest of working capital turnover obtained by PT
Astra Otoparts Tbk (AUTO) amount 18.24. It shows working capital
turnover in one year amounted to 18.24. It means that firms use working
capital effectively. So the company will earn a satisfactory profit. While
the lowest value obtained by PT Goodyear Indonesia Tbk (GDYR) amount
-22.44.It shows the working capital turnover within one year of -22.44. It
means the firms use working capital is not effective. So the company
suffered losses and the company should improve performance in managing
working capital.
c. Analysis of Receivables Turnover
Receivables Turnover ratio is a ratio that shows the efficiency of
the management of the company's receivables. The higher ratio shows that
working capital invested in lower receivables (Sawir, 2003:16)
64
Table 4.3
Receivable Turnover
EMITEN 2008 2009 2010 2011 2012 AVERAGE
ASII 6.66 25.87 18.40 23.00 20.53 18.68
AUTO 11.18 14.18 13.57 13.81 14.35 13.42
GJTL 8.25 9.20 15.72 15.71 22.12 14.20
GDYR 8.11 8.46 9.83 5.86 8.86 8.22
BRAM 15.07 15.45 15.39 17.21 30.07 18.64
IMAS 22.05 21.83 19.22 18.48 35.99 23.51
INDS 16.32 12.46 16.12 18.37 21.89 17.03
LPIN 23.66 62.45 42.71 40.00 48.23 43.41
MASA 7.57 7.19 5.45 9.66 13.90 8.76
NIPS 21.65 25.71 24.93 23.48 32.55 25.66
PRAS 49.50 75.71 113.63 31.66 31.33 60.37
SMSM 18.05 20.30 20.11 37.74 84.46 36.13 Source : data processed
As seen above in Table 4.3 the highest of receivable turnover in
2008 obtained by Prima Alloy Steel Tbk (PRAS) amount 49.50. It shows
the company have high ratio receivable turnover. The high ratio of
receivable turnover indicates that the working capital invested in lower
receivables. It means the absence of over investment in account receivable
and billing toward receivable already effectively. While the lowest value
obtained by PT Astra International Tbk (ASII) amount 6.66. It means
working capital invested in receivable is high and there is over investment
in accounts receivable due to bill does not working effective. So the
company should improve performance in the collection of accounts
receivable.
In 2009, the highest of receivable turnover obtained by PT Prima
Alloy Steel Tbk (PRAS) amount 75.71. It shows the company have high
65
ratio receivable turnover. The high ratio of receivable turnover indicates
that the working capital invested in lower receivables. It means the
absence of over investment in account receivable and billing toward
receivable already effectively. While the lowest value obtained by PT
Multistrada Arah Sarana (MASA) amount 7.19. It means working capital
invested in receivable is high and there is over investment in accounts
receivable due to bill does not working effective. So the company should
improve performance in the collection of accounts receivable.
In 2010, the highest of receivable turnover obtained by PT Prima
Alloy Steel Tbk (PRAS) amount 113.63. It shows the company have high
ratio receivable turnover. The high ratio of receivable turnover indicates
that the working capital invested in lower receivables. It means the
absence of over investment in account receivable and billing toward
receivable already effectively. While the lowest value obtained by PT
Multistrada Arah Sarana (MASA) amount 5.45. It means working capital
invested in receivable is high and there is over investment in accounts
receivable due to bill does not working effective. So the company should
improve performance in the collection of accounts receivable.
In 2011, the highest of receivable turnover obtained by PT Multi
Prima Sejahtera Tbk (LPIN) amount 40.00. It shows the company have
high ratio receivable turnover. The high ratio of receivable turnover
indicates that the working capital invested in lower receivables. It means
the absence of over investment in account receivable and billing toward
66
receivable already effectively. While the lowest value obtained by PT
Goodyear Indonesia (GDYR) amount 5.86. It means working capital
invested in receivable is high and there is over investment in accounts
receivable due to bill does not working effective. So the company should
improve performance in the collection of accounts receivable.
In 2012, the highest of receivable turnover value obtained by PT
Selamat Sempurna (SMSM) amount 84.46. It shows the company have
high ratio receivable turnover. The high ratio of receivable turnover
indicates that the working capital invested in lower receivables. It means
the absence of over investment in account receivable and billing toward
receivable already effectively. While the lowest value obtained by PT
Goodyear Indonesia (GDYR) amount 8.86. It means working capital
invested in receivable is high and there is over investment in accounts
receivable due to bill does not working effective. So the company should
improve performance in the collection of accounts receivable.
d. Analysis of Inventories Turnover
Inventories turnover ratio is a ratio that measures the efficiency of
the management of merchandise. This ratio is an indication to assess the
operational efficiency, which shows how the management of existing
capital controls toward inventory (Sawir 2003: 16)
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Table 4.4
Inventories Turnover Ratio
EMITEN 2008 2009 2010 2011 2012 AVERAGE
ASII 8.69 10.40 9.51 10.89 9.93 9.89
AUTO 6.49 8.39 7.20 6.41 5.99 6.90
GJTL 4.88 7.09 7.27 6.13 5.34 6.14
GDYR 7.62 6.10 7.37 7.55 5.00 6.73
BRAM 3.45 5.31 5.14 4.61 2.58 4.22
IMAS 10.18 7.87 6.18 5.68 3.37 6.66
INDS 1.50 2.49 2.58 2.25 1.65 2.09
LPIN 0.59 1.53 1.26 1.41 1.11 1.18
MASA 2.93 3.05 3.99 2.96 2.20 3.03
NIPS 8.48 3.26 6.28 4.02 3.39 5.08
PRAS 3.46 1.47 0.67 2.62 2.24 2.09
SMSM 3.58 4.15 3.89 4.15 0.87 3.33 Source : data processed
As seen above in Table 4.4 the highest of inventory turnover in
2008 obtained by Indomobil Sukses International Tbk (IMAS) amount
10.18. It shows10.18 times the amount inventory sold in one year. It shows
the company have high inventory. While the lowest value obtained by PT
Multi Prima Sejahtera Tbk (LPIN) amount 0.59. It means 0.59times the
amount of inventory sold in one year. The company does not have low
inventory.
In 2009, the highest of inventory turnover obtained by PT Astra
International Tbk (ASII) amount 10.40. It shows 10.40 times the amount
inventory sold in one year. It shows the company have high inventory.
While the lowest value obtained by PT Prima Alloy Steel Tbk (PRAS)
amount 1.47. It means 0.59times the amount of inventory sold in one year.
The company does not have low inventory.
68
In 2010, the highest of inventory turnover obtained by PT Astra
International Tbk (ASII) amount 9.51. It shows 9.51 times the amount
inventory sold in one year. It shows the company have high inventory.
While the lowest value obtained by PT Prima Alloy Steel Tbk (PRAS)
amount 0.67. It means 0.67times the amount of inventory sold in one year.
The company does not have a low inventory.
In 2011, the highest of inventory turnover obtained by PT Astra
International Tbk (ASII) amount 10.89. It shows 10.89 times the amount
inventory sold in one year. It shows the company have high inventory.
While the lowest value obtained by PT Multistrada Prima Sejahtera Tbk
(LPIN) amount 1.41. It means 1.41 times the amount of inventory sold in
one year. The company does not have low inventory.
In 2012, the highest of inventory turnover obtained by PT Astra
International (ASII) amount 9.93. It shows 9.93 times the amount
inventory sold in one year. It shows the company have high inventory.
While the lowest value obtained by PT Selamat SempurnaTbk (SMSM)
amount 0.87. It means 0.87times the amount of inventory sold in one year.
The company does not have low inventory.
e. Analysis of Current Ratio
Current ratio indicates a company's ability to meet its short term
obligations using its current assets. Current Ratio is the ratio of current
assets to current liabilities (Horne and Wachowicz, 2005: 207-208).
69
Table 4.5
Current Ratio
EMITEN 2008 2009 2010 2011 2012 AVERAGE
ASII 132.17 136.88 126.18 136.40 139.91 134.31
AUTO 213.34 217.39 175.73 135.48 116.49 171.69
GJTL 147.00 253.18 176.09 174.93 162.43 182.73
GDYR 148.79 90.48 86.42 85.34 90.07 100.22
BRAM 219.28 343.74 401.76 278.88 207.57 290.25
IMAS 90.93 93.40 106.94 136.78 117.04 109.02
INDS 107.50 127.22 128.67 240.40 228.00 166.36
LPIN 130.12 227.01 251.66 293.56 331.93 246.86
MASA 89.37 85.92 67.04 48.18 137.21 85.54
NIPS 103.51 99.25 101.71 108.35 113.49 105.26
PRAS 100.87 203.48 135.25 113.78 134.03 137.48
SMSM 181.79 158.70 217.41 271.58 208.17 207.53 Source: data processed
As seen above in Table 4.5 the highest of current ratio in 2008
obtained by Indocordsa Tbk (BRAM) amount 219.28. It shows the
company has good current ratio is equal 219.28. It means the company has
ability to pay off its short term obligation. So the company can avoid the
threat of bankruptcy. While the lowest value obtained by PT Multistrada
Arah Sarana Tbk (MASA) amount 89.37. It shows that the company has
sufficient current ratio is equal to 89.37. It means the company has the
ability to pay off its short term obligation at 89.37. So the company had to
increase the current ratio to avoid bankruptcy.
In 2009, the highest of current ratio obtained by PT Indocordsa
Tbk (BRAM) amount 343.74. It shows the company has good current ratio
is equal343.74. It means the company has the ability to pay off its short
term obligation. So the company can avoid the threat of bankruptcy. While
the lowest value obtained by PT Multistrada Arah SaranaTbk (MASA)
70
amount 85.92. It shows that the company has sufficient current ratio is
equal to 85.92. It means the company has the ability to pay off its short
term obligation at 85.92. So the company had to increase the current ratio
to avoid bankruptcy.
In 2010, the highest of current ratio obtained by PT Astra
International Tbk (BRAM) amount 401.76 It shows the company has good
current ratio is equal 401.76. It means the company has the ability to pay
off its short term obligation. So the company can avoid the threat of
bankruptcy. While the lowest value obtained by PT Multistrada Arah
Sarana Tbk (MASA) amount 67.04. It shows that the company has
sufficient current ratio is equal to 67.04. It means the company has ability
to pay off its short term obligation at 67.04. So the company had to
increase the current ratio to avoid bankruptcy.
In 2011, the highest of current ratio obtained by PT Multi Prima
Sejahtera Tbk (LPIN) amount 293.56. It shows the company has good
current ratio is equal 293.56. It means the company has the ability to pay
off its short term obligation. So the company can avoid the threat of
bankruptcy. While the lowest value obtained by PT Multistrada Arah
Sarana Tbk (MASA) amount 48.18. It shows that the company has
sufficient current ratio is equal to 48.18. It means the company has the
ability to pay off its short term obligation at 48.18. So the company had to
increase the current ratio to avoid bankruptcy.
71
In 2012, the highest of current ratio obtained by PT Multi Prima
Sejahtera (LPIN) amount 331.93. It shows the company has good current
ratio is equal 331.93. It means the company has the ability to pay off its
short term obligation. So the company can avoid the threat of bankruptcy.
While the lows value obtained by PT Goodyear Indonesia Tbk (GDYR)
amount 90.07. It shows that the company has sufficient current ratio is
equal to 90.07. It means the company has the ability to pay off its short
term obligation at 90.07. So the company had to increase the current ratio
to avoid bankruptcy.
2. Classical Assumption Test
a. Normality Test
Before testing the hypothesis it is necessary to test the normality of
the data that is useful to know the distribution pattern of the data variance,
normality test used in support of non-parametric tests Kolmogrov Smirnov
One Sample Test. Variables considered normal if the value of the resulting
asym sig> 0.05. Based on the results of normality testing that has been
done shows a summary of the results as shown in Table 4.6 below:
72
Table 4.6 Kolmogrov-Smirnov Normality Test
One-Sample Kolmogorov-Smirnov Test
Residual
N 60
Normal Parametersa,ª
Mean 6.9953
Std. Deviation 3.13873
Most Extreme Differences
Absolute .103
Positive .103
Negative -.077
Kolmogorov-Smirnov Z .798
Asymp. Sig. (2-tailed) .547
a. Test distribution is Normal.
b. Calculated from data.
Based on the results of testing the normality test in this study had
normal distribution, it is proved by the asymp sig > 0.05 therefore test the
hypothesis has to be done.
Data normality test aims to test whether the regression model, the
dependent variable, the independent variable or both have a normal
distribution.
73
Figure 4.1
Test Result of Normality Data
Based on the Normal Probability Plot of Residuals, note that the
residuals form a pattern of straight lines, so it can be concluded that the
residuals are normally distributed.
b. Multicollinearity Test
Multicollinearity test aims to test whether the regression model
found a correlation between the independent variables. A Good regression
models should be not correlation in the independent variables. The
multicollinearity test by looking at the value of VIF should be below 10, it
will be explained as follows:
74
Table 4.7
Multicollinearity Test
Coefficientsa
Model Collinearity Statistics
Tolerance VIF
1
WCTO .976 1.024
RECTO .763 1.311
INVTO .760 1.316
CR .941 1.063
a. Dependent Variable: ROI
Table 4.7 explains that the data did not occur multicollinearity
between each independent variable by looking at the value of tolerance
and VIF. The value of tolerance more than 0.10 and also the value of VIF
less than 10.
c. Autocorrelation Test
Statistical tests were used to detect the presence or absence of
autocorrelation in the analysis is the Durbin-Watson test statistic, obtained
results:
Table 4.8
Autocorrelation Test
Model Summaryª
Model R R Square Adjusted R
Square
Std. Error of the
Estimate
Durbin-Watson
1 .467a .218 .161 6.04663 1.388
a.Dependet Variable :ROI
75
From the table 4.8, it can be seen that the Durbin-Watson value of
1.388. This value will be compared with the table value by using the
significance of 5%, the number of samples (n) 60 and k = 5 the value of dL
= 1.374 and dU = 1.768.The test results showed that the regression model
in this study there is no autocorrelation since the Durbin-Watson (Dw) in
the amount of 1,388 located between du (1,374) and dl (1,768) which
means the autocorrelation coefficients equal to zero.
d. Heteroscedastisity Test
Heteroscedastisity test aims to test whether the regression model
variants of residual inequality occurs one observation to another
observation. On a good regression model is conditioned homocedastisity
or not happen heteroscedastisity. Heteroscedastisity test results in this
study can be seen in Figure 4.2 below:
Figure 4.2
Heteroscedastisity Test
76
From the scatterplot graph shows that the points of the data spread
and scattered randomly either above or below the zero on the Y axis and
does not form a particular pattern. It can be concluded that there is no
heterocedastisity on regression models or data are homocedastisity, so the
regression model is used to analyze a decent ROI
C. Hypothesis Testing
1. Analysis of Coefficient Multiple Regression
a. Simultaneous Test (F Test)
Table 4.9
F Test
ANOVAa
Model Sum of Squares Df Mean Square F Sig.
1
Regression 559.467 4 139.867 3.825 .008b
Residual 2010.896 55 36.562
Total 2570.363 59
a. Dependent Variable: ROI
b. Predictors: (Constant), CR, WCTO, RECTO, INVTO
Shown in Table 4.9 F test results that can be used to test whether
the regression model was fit to the data obtained or not. If there is a match
between the regression model to the data, the regression model can be used
to analysis ROI, measured from the working capital turnover, inventories
turnover, receivables turnover, and current ratio.
77
From the results obtained by the F test that Ftest 3,825 with a
significance level of 0.008. Ftable is 2.54 obtained from V1 = (k-1) = 5-1 = 4
and V2 = (n-k) = 60-5 = 55, so df = (V1; V2) = (4; 55) then the value Ftable
F (0.05; 4 ; 55) = 2.54. Because the value Ftest is greater than Ftable and
significance level< 0.05 then H0 is rejected and H1 is accepted. It means
variable independent (working capital turnover, receivable turnover,
inventory turnover, and current ratio) have a significant positive effect
toward the profitability (ROI) of the company's Automotive and
Components with a simultaneous.
In addition to determine the effect of independent variables toward
the dependent variable, the analysis also showed that R square is essentially
used to measure how far the model's ability to explain variation in the
dependent variable. In Table 4.8 R square value of 0.161 means that about
16.1 percent of the variable profitability is affected by the independent
variable working capital turnover, receivables turnover, inventories
turnover, and current ratio, while the remaining 83.9 percent of other
variables influenced from outside the model.
78
b. Partial Test (T Test)
Table 4.10
Partial Test (T Test)
Coefficients
a
Model Unstandardized Coefficients Standardized Coefficients
T Sig.
ª Std. Error Beta
1
(Constant) .958 3.035 .316 .753
WCTO -.002 .020 -.010 -.080 .936
RECTO -.077 .046 -.231 -1.691 .096
INVTO .466 .328 .194 1.419 .162
CR .035 .011 .393 3.195 .002
a. Dependent Variable: ROI
1. Test the significance of working capital turnover (X1) in the regression
model:
From the table above, it can be seen that the working capital
turnover variable t has a value of -0.080 with a significant level of
0.936, meaning that the variable working capital turnover has no
significant effect toward ROI at the level of 1%, 5%, 10%.
2. Test the significance of the coefficient of receivable turnover (X2) in
the regression model:
From the table above, it can be seen that the receivable turnover
variable coefficient t -1.691 with a significant level of 0.096, meaning
that the Receivable turnover variables has significant negative effect
toward ROI at the level of 10%. (0.096 <0.10)
3. Test the significance of the coefficient of inventory turnover (X3) in
the regression model:
79
From the table above, it can be seen that the Inventory turnover has
variable coefficient t 1,419 with a significant level of 0.162, meaning
that the variable Inventory turnover has no significant effect toward
ROI at level of 1%, 5%, 10%.
4. Test the significance of the coefficient of current ratio (X4) in the
regression model:
From the table above, it can be seen that the variable coefficient t
3,195 receivable turnover with a significant level of 0.002, meaning
that the variable current ratio has significantly positive effect toward
ROI at the level of 1%. (0.002<0.01)
From the table above equation or the regression model as follows:
Y= 0.958 - 0.077 X2+ 0.035 X4
Where, X2 = Receivable Turnover
X4 = Current Ratio
Based on the regression equation can be seen that:
1. Constants of 0.958 states that if the value of the independent
variable is zero, then the amount of ROI is 0.958
2. Regression coefficient of receivables turnover 0.077 by stating
that each additional 1 from variable receivables turnover (-)
then the value of Y (ROI) will be reduced by 0.077 which other
variables held constant.
80
3. Regression coefficient of current ratio of 0.035 states that each
additional 1 from variable current ratio (+) then the value of Y
(ROI) will increase by 0.035 which other variables held
constant.
c. Coefficient of Determination Test (R Square)
Table 4.11
Coefficients Determination
Model Summaryª
Model R R Square Adjusted R
Square
Std. Error of the
Estimate
1 .467a .218 .161 6.04663
b. Dependent Variable: ROI
In Table 4.11, obtained a regression model with a coefficient of
determination (Adjusted R square) of 0.161 (16.1%). The coefficient of
determination indicates that 16.1% ROI can be influenced by working
capital turnover, receivables turnover, inventories turnover, and current
ratio. While 83.9% (100%-16.1%) ROI influenced by other variables.
D. Interpretation
Based on the test results found that the receivables turnover has
significant effect toward the profitability of the company. Any negative effect
indicates that the smaller the accounts receivable turnover rate will increase
the profitability of the company. This is consistent with the theory of Emery
(2005), trade receivables are short-term investments are more profitable than
81
bonds, high profits play an important role in the addition of accounts
receivable, because companies with high profit levels have more cash to lend
to consumers. Lazaridis and Tryfonidiz (2006), examines the "Relationship
Between Working Capital Management And Profitability Of Listed
Companies in the Athens Stock Exchange". This study aimed to investigate
the relationship between working capital management and profitability of the
company. Analysis based on a sample of 131 companies listed on the Athens
Stock Exchange for the period 2001-2004. This study uses descriptive analysis
and regression analysis. The results showed a significant negative relationship
receivable turnover, inventory turnover on profitability. Results found in this
study do not correspond with Rahmi (2010) who suggested that accounts
receivable turnover has no effect on profitability. Rahmi (2010) conducted a
study on the effect of fixed asset turnover, inventory turnover, accounts
receivable turnover toward profitability in real estate and property companies
listed in Indonesia Stock Exchange. The results of this study only variable
fixed assets has significant effect toward profitability while inventory turnover
and accounts receivable turnover have no effect toward profitability. Another
case study conducted by Pedro, doing research on the effect of working capital
management on SME profitability is conducted using correlation analysis. The
results showed that a significant relationship between receivables and
inventories on profitability of SMEs.
In this study, current ratio has significant positive effect toward ROI,
but this is contrary to the theory expressed by Van Horne (2005) who stated
82
profitability is inversely related between liquidity toward profitability is
directly proportional to the risk. In achieving higher profitability should be
aware that the risks faced will be greater. Current Ratio in the study had
significant positive impact on profitability. This result means directly
proportional to the profitability and expressed higher level of liquidity, the
higher the profitability. In accordance with research Anggarini (2009), that the
current ratio has influence toward profitability of the company. The current
ratio has positive and significant effect toward return on investment (ROI). If
the current ratio increased or decreased, then ROI will usually experience the
increased or decrease.
83
CHAPTER V
CONCLUSION AND IMPLICATION
A. Conclusion
Based on the discussion of research results in the previous chapter, it is
obtained the following conclusions :
1. Working capital turnover and inventory turnover has no significant
effect toward ROI.
2. Receivable turnover has negative significant effect toward ROI. These
results are consistent with research Siahaan (2007) and Yennis
Andriani (2009). While the current ratio has positive significant impact
toward ROI. According to Anggarini (2009), the current ratio has
positive and significant effect toward return on investment. If the
current ratio increased or decreased, then the ROI will usually
experience the same thing. Horne and Wachowicz (2005: 313)
mentions that the greater of liquidity, the stronger of the financial
condition, and the greater the profit in the company means that the
higher the level of risk that funding is used.
3. The value coefficient of determination adjusted R square of 0.161. This
means that 16.1% of the return on investment can be explained
independents variable are working capital turnover, receivables
turnover, inventory turnover, and current ratio. It can be determined
the value of beta coefficient in the independent variables.
84
B. Implication
This study will be useful for certain parties are utilized :
1. For companies
Expected results of this study can help the company in considering
funding decisions to be taken, because the funding decisions taken will
affect other decisions and influence survival of the company. Besides
that considering the important of working capital, operations,
management of company must use working capital effectively and
efficiently . Factors affecting working capital are sales volume, the time
to produce goods, terms of sale, and inventory. So that the management
company is able to get profitability.
2. For investor
This study is expected to be a consideration in determining and
deciding which investments will be made, because every investor want
to get maximum profit. Therefore, investors should be carrefully to take
investment decisions. It is done to avoid the risks of losses that would
occur at any time.
3. For academics
This study has weaknesses that can be used in consideration for
future research. Such as the short period of only 5 years of research, a
limited number of samples, so that further research is expected to add to
the period of the study are used to produce information that is more
85
supportive. Number of samples used can be added and extended to
other sectors, the number of financial ratios are used as a research
model reproduced so that the conclusions reached will be perfect.
C. Recommendation
Based on the results of data analysis and tests performed in this study,
it can be expected a few suggestions that can be used in subsequent
studies, among others:
1. In this study only uses profitability as the dependent variable, it is
recommended that further research can add a dependent variable, and
also adds the independent variable.
2. Extending the period of observation, because the longer time interval of
observation, the greater opportunity to obtain reliable information
about the variables to make accurate forecasting.
3. Using different research objects in order to expand research on the
same thing, and to expand the relationship between activity ratios and
financial ratios.
86
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idx.co.id
kemenperin.go.id
gaikindo.com
yahoofinance.com
88
APPENDIX 1
List of Sample
Company (2008-2012)
No Code Company
1. ASII Astra International Tbk
2. AUTO Astra Otoparts Tbk
3. GJTL Gajah Tunggal Tbk
4. GDYR Goodyear Indonesia Tbk
5. BRAM Indo Kordsa Tbk
6. IMAS Indomobil Sukses International Tbk
7. INDS Indospring Tbk
8. LPIN Multi Prima Sejahtera Tbk
9. MASA Multistrada Arah SaranaTbk
10. NIPS Nipress Tbk
11. PRAS Prima Alloy Steel Tbk
12. SMSM Selamat Sempurna Tbk
89
APPENDIX 2
Data
Processed
Working Capital Turnover EMITEN 2008 2009 2010 2011 2012
ASII 11.22 9.99 13.37 9.23 8.70
AUTO 5.39 4.58 6.60 10.96 18.24
GJTL 8.18 3.89 5.08 5.45 5.05
GDYR 8.52 -30.82 -21.15 -18.45 -22.44
BRAM 3.08 3.23 4.15 3.84 2.61
IMAS -26.39 -34.32 37.37 7.92 11.47
INDS 20.22 8.15 8.69 2.66 2.35
LPIN 2.02 1.09 0.98 0.94 0.64
MASA -18.22 -14.04 -6.13 -2.11 4.30
NIPS 78.38 -219.72 133.45 28.20 14.25
PRAS 127.94 1.31 1.36 11.06 4.86
SMSM 5.42 6.46 4.37 3.98 1.22
Receivable Turnover
EMITEN 2008 2009 2010 2011 2012
ASII 6.66 25.87 18.40 23.00 20.53
AUTO 11.18 14.18 13.57 13.81 14.35
GJTL 8.25 9.20 15.72 15.71 22.12
GDYR 8.11 8.46 9.83 5.86 8.86
BRAM 15.07 15.45 15.39 17.21 30.07
IMAS 22.05 21.83 19.22 18.48 35.99
INDS 16.32 12.46 16.12 18.37 21.89
LPIN 23.66 62.45 42.71 40.00 48.23
MASA 7.57 7.19 5.45 9.66 13.90
NIPS 21.65 25.71 24.93 23.48 32.55
PRAS 49.50 75.71 113.63 31.66 31.33
SMSM 18.05 20.30 20.11 37.74 84.46
90
Inventories Turnover
EMITEN 2008 2009 2010 2011 2012
ASII 8.69 10.40 9.51 10.89 9.93
AUTO 6.49 8.39 7.20 6.41 5.99
GJTL 4.88 7.09 7.27 6.13 5.34
GDYR 7.62 6.10 7.37 7.55 5.00
BRAM 3.45 5.31 5.14 4.61 2.58
IMAS 10.18 7.87 6.18 5.68 3.37
INDS 1.50 2.49 2.58 2.25 1.65
LPIN 0.59 1.53 1.26 1.41 1.11
MASA 2.93 3.05 3.99 2.96 2.20
NIPS 8.48 3.26 6.28 4.02 3.39
PRAS 3.46 1.47 0.67 2.62 2.24
SMSM 3.58 4.15 3.89 4.15 0.87
Current Ratio
EMITEN 2008 2009 2010 2011 2012
ASII 132.17 136.88 126.18 136.40 139.91
AUTO 213.34 217.39 175.73 135.48 116.49
GJTL 147.00 253.18 176.09 174.93 162.43
GDYR 148.79 90.48 86.42 85.34 90.07
BRAM 219.28 343.74 401.76 278.88 207.57
IMAS 90.93 93.40 106.94 136.78 117.04
INDS 107.50 127.22 128.67 240.40 228.00
LPIN 130.12 227.01 251.66 293.56 331.93
MASA 89.37 85.92 67.04 48.18 137.21
NIPS 103.51 99.25 101.71 108.35 113.49
PRAS 100.87 203.48 135.25 113.78 134.03
SMSM 181.79 158.70 217.41 271.58 208.17
91
Return on Investment
EMITEN 2008 2009 2010 2011 2012
ASII 11.38 11.29 12.73 13.91 12.32
AUTO 14.22 16.54 20.44 15.88 12.12
GJTL -7.17 10.20 8.01 8.19 5.55
GDYR 0.08 10.74 5.81 3.14 4.65
BRAM 5.67 5.34 8.99 3.31 7.93
IMAS 0.41 2.31 5.62 8.26 3.12
INDS 3.47 9.46 9.23 10.57 30.96
LPIN 2.60 7.40 9.36 7.19 8.22
MASA 0.13 6.89 5.80 3.01 0.20
NIPS 0.48 1.17 3.74 3.99 3.40
PRAS -2.67 -8.61 0.32 0.94 0.53
SMSM 9.84 14.11 14.10 19.29 3.61
92
APPENDIX3
DESCRIPTIVE STATISTICS
Descriptive Statistics
Mean Std. Deviation N
ROI 6.9953 6.60041 60
WCTO 4.4772 40.53108 60
RECTO 24.0203 19.70939 60
INVTO 4.7775 2.75137 60
CR 161.4363 73.71019 60
93
APPENDIX4
MULTIPLE REGRESSION ANALYSIS TEST
NORMALITY TEST
One-Sample Kolmogorov-Smirnov Test
Residual
N 60
Normal Parametersa,ª
Mean 6.9953
Std. Deviation 3.13873
Most Extreme Differences
Absolute .103
Positive .103
Negative -.077
Kolmogorov-Smirnov Z .798
Asymp. Sig. (2-tailed) .547
a. Test distribution is Normal.
b. Calculated from data.
94
HETEROCEDASTICITY TEST
MULTIPLE REGRESSION TEST
Variables Entered/Removeda
Model Variables
Entered
Variables
Removed
Method
1
CR, WCTO,
RECTO,
INVTOb
. Enter
a. Dependent Variable: ROI
b. All requested variables entered.
Model Summaryª
Model R R Square Adjusted R
Square
Std. Error of the
Estimate
Durbin-Watson
1 .467a .218 .161 6.04663 1.388
b. Dependent Variable: ROI
95
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1
Regression 559.467 4 139.867 3.825 .008ª
Residual 2010.896 55 36.562
Total 2570.363 59
a. Dependent Variable: ROI
b. Predictors: (Constant), CR, WCTO, RECTO, INVTO
Coefficientsa
Model Collinearity Statistics
Tolerance VIF
1
WCTO .976 1.024
RECTO .763 1.311
INVTO .760 1.316
CR .941 1.063
a. Dependent Variable: ROI
Coefficientsa
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
ª Std. Error Beta
1
(Constant) .958 3.035 .316 .753
WCTO -.002 .020 -.010 -.080 .936
RECTO -.077 .046 -.231 -1.691 .096
INVTO .466 .328 .194 1.419 .162
CR .035 .011 .393 3.195 .002
a. Dependent Variable: ROI
