The Effect Of Working Capital Turnover, Cash Turnover, Receivable Turnover, Leverage, And Company Growth On Economic Profitability (Analysis Of Panel Data In Mining Companies Listed On The IDX 2018-2022)

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The Effect of Working Capital Turnover, Cash Turnover, Receivable Turnover, Leverage, and Company Growth on Economic Profitability: An Analysis of Panel Data in Mining Companies Listed on the IDX 2018-2022

Introduction

The mining industry plays a crucial role in the economy of many countries, including Indonesia. As a significant contributor to the country's GDP, the mining sector requires effective financial management to achieve optimal results. One of the key aspects of financial management is the ability to manage working capital, cash, and receivables efficiently, as well as leverage and company growth. This study aims to analyze the effect of these variables on economic profitability, specifically Return on Assets (ROA), in mining companies listed on the Indonesia Stock Exchange (IDX) from 2018 to 2022.

Research Methodology

This study employed a quantitative approach, using secondary data from the annual reports of 60 mining companies listed on the IDX. The data analysis techniques applied include multiple linear regression analysis, F test, and t test. These methods allowed researchers to explore the relationship between independent variables (working capital, cash turnover, receivable turnover, leverage, and company growth) and the dependent variable, namely economic profitability measured through ROA.

Main Findings

The results of the analysis show that the turnover of the company's receivables and growth have a significant positive influence on ROA. This means that the more efficient the company in managing receivables and the higher the growth achieved, the better the performance of economic profitability produced. This emphasizes the importance of effective receivable management and appropriate growth strategies.

On the other hand, working capital turnover, cash turnover, and leverage do not show a significant effect on economic profitability. Although these three variables are important in the company's financial management, there is not enough evidence to state that they contribute directly to the increase in ROA to the mining company under study.

Overall Analysis

When analyzed as a whole, it can be concluded that although some variables do not have an individual significant impact, the existence of interaction between all variables - working capital, cash turnover, receivable turnover, leverage, and company growth - have a collective effect on economic profitability. This shows the importance of a holistic approach in financial management, where companies need to pay attention to all these aspects to improve overall financial performance.

The Importance of this Research

The importance of this research lies in its connection with the mining industry, which is very influential on the country's economy. By understanding the factors that influence profitability, the company can formulate a better strategy in the management of assets and resources to achieve optimal results.

Conclusion

This study provides in-depth insight into the factors that influence economic profitability in the mining sector. To increase ROA, companies need to focus more on managing receivables and develop effective growth strategies. In addition, working capital, cash, and leverage turnover remains important to consider, although the effect is not as strong as two other main variables. Through this analysis, the company is expected to better understand its dynamics and take the right strategic steps in the future.

Recommendations

Based on the findings of this study, the following recommendations are made:

  1. Effective Receivable Management: Companies should focus on managing receivables efficiently to increase ROA.
  2. Appropriate Growth Strategies: Companies should develop effective growth strategies to achieve higher growth and improve economic profitability.
  3. Holistic Approach in Financial Management: Companies should pay attention to all aspects of financial management, including working capital, cash, and leverage turnover, to improve overall financial performance.

By implementing these recommendations, mining companies listed on the IDX can improve their economic profitability and achieve optimal results.

Limitations of the Study

This study has several limitations, including:

  1. Sample Size: The sample size of 60 companies may not be representative of the entire mining industry.
  2. Data Availability: The availability of data may be limited, which may affect the accuracy of the results.
  3. Methodology: The use of multiple linear regression analysis may not capture the complexity of the relationships between variables.

Future studies should address these limitations and explore other aspects of financial management in the mining industry.

Future Research Directions

Future research should focus on:

  1. Exploring Other Factors: Investigating other factors that influence economic profitability in the mining industry.
  2. Using Other Methodologies: Employing other methodologies, such as machine learning or panel data analysis, to capture the complexity of the relationships between variables.
  3. Examining Other Industries: Analyzing the effect of working capital, cash, and leverage turnover on economic profitability in other industries.

By exploring these research directions, future studies can provide a more comprehensive understanding of the factors that influence economic profitability in the mining industry.
Q&A: The Effect of Working Capital Turnover, Cash Turnover, Receivable Turnover, Leverage, and Company Growth on Economic Profitability

Q: What is the main objective of this study?

A: The main objective of this study is to analyze the effect of working capital turnover, cash turnover, receivable turnover, leverage, and company growth on economic profitability, specifically Return on Assets (ROA), in mining companies listed on the Indonesia Stock Exchange (IDX) from 2018 to 2022.

Q: What are the independent variables in this study?

A: The independent variables in this study are:

  1. Working Capital Turnover: The ratio of sales to working capital.
  2. Cash Turnover: The ratio of sales to cash.
  3. Receivable Turnover: The ratio of sales to accounts receivable.
  4. Leverage: The ratio of debt to equity.
  5. Company Growth: The rate of change in sales or revenue.

Q: What is the dependent variable in this study?

A: The dependent variable in this study is Economic Profitability, specifically measured through Return on Assets (ROA).

Q: What are the main findings of this study?

A: The main findings of this study are:

  1. Receivable Turnover and Company Growth have a significant positive influence on ROA.
  2. Working Capital Turnover, Cash Turnover, and Leverage do not show a significant effect on ROA.

Q: What are the implications of this study?

A: The implications of this study are:

  1. Companies should focus on managing receivables efficiently to increase ROA.
  2. Companies should develop effective growth strategies to achieve higher growth and improve economic profitability.
  3. Companies should pay attention to all aspects of financial management, including working capital, cash, and leverage turnover, to improve overall financial performance.

Q: What are the limitations of this study?

A: The limitations of this study are:

  1. Sample Size: The sample size of 60 companies may not be representative of the entire mining industry.
  2. Data Availability: The availability of data may be limited, which may affect the accuracy of the results.
  3. Methodology: The use of multiple linear regression analysis may not capture the complexity of the relationships between variables.

Q: What are the future research directions?

A: The future research directions are:

  1. Exploring Other Factors: Investigating other factors that influence economic profitability in the mining industry.
  2. Using Other Methodologies: Employing other methodologies, such as machine learning or panel data analysis, to capture the complexity of the relationships between variables.
  3. Examining Other Industries: Analyzing the effect of working capital, cash, and leverage turnover on economic profitability in other industries.

Q: What are the practical implications of this study?

A: The practical implications of this study are:

  1. Companies can use this study to improve their financial management and increase their economic profitability.
  2. Investors can use this study to make informed decisions about investing in mining companies.
  3. Regulators can use this study to develop policies that promote the growth and development of the mining industry.