The Effect of Working Capital Management on Firms’ Performance (The Case Study on Retail Companies Listed on Indonesian Stock Exchange Period 2016-2021)

Ghina Yasmin Mumtaz, Ade Banani, Dian Purnomo Jati

Abstract


This study is aimed to analyze the effect of working capital management ratio such as average days of receivable, average days of inventory and average days of payable on firms’ performance as measured by return on asset. The population of the study is retail companies listed on the IDX for the period 2016- 2021. The sample selection was done by purposive sampling method and obtained 15 companies. The data used was secondary data in the form of financial statements from official website of IDX and each company. Methods of data collection were done by literature study and documentation. This study used a quantitative approach. The analytical methods used include descriptive statistical test, classical assumption test, panel data regression analysis. Based on the result of the study and data analysis using Eviews 12, the results obtained that average days of receivable has negative and significant effect on firms’ performance, average days of inventory has positive and significant effect on firms’ performance, average days of payable has negative and significant effect on firms’ performance. Leverage as the control variable has negative and significant effect on firms’ performance.

Keywords: Return on Asset, Average Days of Receivable, Average Days of Inventory, Average Days of Payable


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