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Analysis The Influence of Efficiency Working Capital, Liquidity and Solvability to Profitability in Companies
Listed at The Indonesian Stock Exchange The Period of 2010- 2015
SUKMA IRDIANA
STIE WIDYA GAMA LUMAJANG
[email protected]
Abstract
An enterprise must have desire to acquire profitability high .For that companies should be able to manage efficiency
working capital, liquidity and solvabilitasnya. This study attempts to know how big the influence of efficiency
working capital, liquidity and solvability to profitability in companies listed at the indonesian stock exchange.
Sample selection is based on a method of purposive sampling. Lab data is obtained from secondary data of financial
report. This study will uses the multiple regression data this research mixed with on the spss 16.0. The findings from
the study in partial shows that efficiency working capital (WCT) have no influence very significant to profitability.
But liquidity (CR) and solvability (DER) having influence very significant to profitability. While simultaneously
show efficiency working capital (WCT), liquidity (CR) and solvability (DER) having influence very significant to
profitability .
Keywords: Efficiency Working Capital , Liquidity, Solvability and Profitability.
1.
Introduction
An enterprise must be want profitability high.To companies must keep profitabilitasnya remain stable. So the
purpose company to achieved profitability optimal can be achieved. Profitability can provide guidance useful in
judging keefektivan of the operation of a company, raising the profitability going to show you a combination of
effect liquidity, management assets, and debts on result operation. One of monetary policy affect the ability
corporation gaining problems efficiency of profits is working capital. Efficiency can also called as a to where his
emphasis besides the results of to be achieved, also reckon sacrifice to achieve a result.
The companies as decide on and set capital work in large numbers, the large level liquidity company, so also
contrary to other things. With a greater liquidity, risk the less, but the opportunity to derive profit big is going to
decreased in the end have an impact on the decline in profitability. But if company wants to maximize profitability,
the possibility of can affect the level of liquidity company. The higher liquidity, so more all right position company
in the sight of a creditor. By because there were more likely that firms would can pay their obligations on in time.
On the other hand in terms of terms angles shareholders, liquidity high not always favorable because had a chance
cause that the funds idle who can actually be used to invest in projects favorable company. Apart from issues
mentioned above the company is also faced with problems the determination of a source of funding. Meeting the
needs of funds for a company could be met from a source internal company, namely by trying to establish a the
withdrawal of capital through sales stock to the public or profit detained that is not divided and used again as capital.
Meeting the needs of company funds can are also filled by from a source ekstern namely by borrow fund to the
creditor such as bank, financial institutions is not bank, or can also company issue bonds to is offered to the public.
But if the companies to take more debt as a source of funding, hence the burden of interest that they had to in
the also rose. Basically, if the company increase the amount payable as a source of the funds that this will raise
financial risk and companies would get these opportunities profit larger. However, if the company unable to manage
the funds to be obtained from debt in a productive way, this may give negative influence and give the impact on
profitability a fall in the company. In contrast if the debt can be managed well and used for the project a productive
investment, this may give impact a positive and an impact on the increase in company profitability.
For that the study is done at companies listed at the indonesian stock exchange exactly at companies that are
part stock blue chips. The period observations on the this research, starting in 2010 - 2015.
Based on the background above then the researcher formulate problems as follows: 1) What is the efficiency
working capital partial significant to profitability?, 2) What is the liquidity partial significant to profitability?, 3)
What is the significant solvability a partial to profitability?, 4) What is the efficiency working capital, liquidity, and
significant solvability simultaneously to profitability?.
2. THEORETICAL FRAMEWORK AND HYPOTHESIS DEVELOPMENT
2.1. Financial Management
Financial management is the planning activities, the creation and controlled by: the utilization of the
allocation of funds, the search for funds and distribution of the profit. It can be said that financial management is the
activity of the company to obtain funds and use these funds in an efficient way to achieving the objective company.
In addition to related to the activity of the company to obtain funds, financial management also referred to their
ability to handle finances in the corporate setting, mengefisiensikan funds so that achieved a balance between
spending and earnings of a corporation that in the end will have an impact both to corporate profits. (Wibisono,
1997:5).
2.2. Working Capital
Working capital is a sum of money that is always available in companies that used to membelanjai activities
company. Activities company to begin if they are funds available which have been taken acceptable back in a time
period of a year.
Working capital management is very important that the survival of business a company could be maintained.
(Hanafi, 2005:125) in Ekadini for 2010. Mistakes or blunders in the management of working capital will cause the
bad condition of a finance company to optimize the company can hampered or areas have completely stopped.
Working capital funding usually to support sales. Many companies set assets smoothly in accordance with
the proportion its annual sales. Seasonal fluctuations will demand for products or services company a decisive factor
the size of the working capital. The trend certain products at a particular time cause demand for goods or services
increase so that it needed working capital high. Technological change that of course have an impact on production
process have a strong influence on the needs of working capital. To the process production conventional usually
done by the energy and human beings replaced by a machine can be cut back of workers that finally reduce the need
for working capital.Company policy will have an impact on the level of working capital permanent and seasonal, for
example be decided save emphasized by new management.
With the number of expenditure every day that remains, but with the long period of perputarannya, the
number of working capital taken was more besar.demikian also the case with the period gyrations fixed, with the the
large number of cash outlays every day, capital needs kerjapun the greater.
The period gyrations or period of their lack of roots working capital is constitute a whole or amount of
periods which includes the period of the credit buy, long storage raw materials in a warehouse, long process of
production, long goods so stowed in a barn and the period of time the credit.
In conclusion, the use of capital work as a broad outline determined by a factor of national and international
company. Where the internal factor related to issues related to the production process while external factors
influenced by the state of economy and market. (Ekadini, 2010:21) .
2.3. Efficiency Working Capital
Efficiency working capital is the use of working capital activity operational company optimally that can
improve prosperity the company own. The use of capital verb be expressed optimal if the number of working capital
used in the company capable of producing a big profit also for the company.
Efficiency working capital this demonstrate her achievement management in managing resources company
optimally. More and more efficient the use of working capital the more good performance company management.
Efficiency in working capital management is also necessary to guaranteed or longer term success in achieving its
objectives company as a whole.
To count efficiency working capital can use working capital turnover. Where working capital turnover is the
ratio to indicates a considerable the sale of (in rupiah) which may be obtained company for each the rupiah working
capital. Formulations of the working capital turnover ( WCT ) is as follows (Sawir , 2001:16 ):
WTC =
Sales
X 100%
current assets – current debt
2.4. Liquidity
The ratio liquidity according to Fred Weston was quoted as saying by Kasmir (2010: 129) said that, “The
ratio liquidity ( liquiditiy ratio ) is a ratio describing the ability company in satisfying an obligation (a debt) shortterm.” To judge liquidity it can be used current ratio. Current ratio according to Van Horne (2009: 206) is “the ratio
and it represents the ability company to pay short term by using assets the smooth.” Formulation to know the ratio
this as following (Van Horne , 2009:206) :
Current Ratio =
current assets
X 100%
current debt
2.5. Leverage
According to Kasmir (2010:151), the ratio solvability (leverage ratio) is “ratio which is used for measuring
the extent to which assets company funded by debt.“ To assess the solvability company can use debt to equity ratio.
Debt to equity ratio is the debt ratio to equities. Where the ratio is used to judge in debt by equity. Formulation to
find the ratio debt to equity ratio as following (Kasmir, 2010:158) :
Debt to Equity Ratio =
Total Debt
X 100%
Equitas
2.6. Profitability
The ratio profitability according to Kasmir (2010:196) “is the ratio to assess the ability firm in seek“. The
ratio it can be carried out by comparing the various components that is in financial report, especially the balance and
profit and loss statement. The goal is to seeing the development of company over time, good the decline in or
increase. For measuring the degree of profitability can use return on investment. Return on investment is the ratio
which the show results (return) on number of any assets that are used in the company. A formula to find return on
investment can be used as following (Kasmir, 2010:202) :
ROI =
Profit after interest and taxes
total assets
2.7. The Influence of Variable Independent to Variable Dependent
2.7.1. The Influence of Efficiency Working Capital to Profitability
Efficiency capital work can be were assessed using the ratio between total sales by the number of working
capital the average often called working capital turnover (gyrations working capital). The ratio this show the relation
between working capital with a sale that may obtained company for each the rupiah working capital. Gyrations
working capital it would affect to the level of profitability. From the explanation above, can be drawn a hypothesis
as follows:
H1 = gyrations working capital (working capital turnover) have had a positive impact to profitability
2.7.2. The influence of liquidity to profitability
The ratio smoothly is ratio which is used to measuring how much liquidity company. The ratio smoothly is
the comparison between assets smoothly with debt smoothly. The ratio can be demonstrating ability company to pay
short term (Horne and Wachowicz, 2009). From the description above, can be drawn a hypothesis as follows:
H2 = current ratio have a negative influence on profitability
2.7.3. The influence of the solvability of to profitability
According to Kasmir (2010:151), the ratio solvability (leverage ratio) is “ratio which is used for measuring
the extent to which assets company funded by debt.” The ratio is used for measures the company to pay all of their
obligations, good short-term as well as long-term if it liquidated. From the description above, can be drawn
hypothesis as follows:
H3 = debt to equity the ratio have had a positive impact to profitability
3. RESEARCH METHOD
Data sources this research using secondary data, that is a source of lab data obtained from the data in the form
of documents and information written that deals with the object research that is published by other parties, in this
case the the indonesia stock exchange .
3.1. The population and sample
Population in research it is a whole companies that joined in the group stock blue chips listed on the
indonesian stock exchange than last year until 2015 which have a report financial complete and published in
indonesian capital markets directory ( ICMD ).
Sample selection policy is based on a method of purposive of sampling , namely sample selection of stocks of
companies over a period of research based on the consideration or certain criteria .The purpose of this method to get
samples reprensentatif in accordance with the criteria which had been determined .
Based on kriteria-kriteria or consideration determined than last year until 2015 30 pkl companies that joined
in the group stock blue chips listed on the indonesian stock.Of the total population that is, sample meet the criteria
which had been determined consisted of 13 sample company.
3.2. Operational definition
3.2.1. Efficiency working capital
Efficiency working capital is the use of working capital activity operational company optimally that can
improve prosperity the company own. Formulation of working capital turnover (WCT) do as following (Sawir,
2001:16).
WTC =
Sales
X 100%
current assets – current debt
3.2.2.
Liquidity
The ratio liquidity (liquiditiy ratio) is a ratio describing the ability company in satisfying an obligation (a
debt) short-term. Formulation to know the ratio this as following (Van Horne, 2009:206).
Current Ratio =
current assets
X 100%
current debt
3.2.3. Leverage
The ratio solvability (leverage ratio) is ratio which is used for measuring the extent to which assets company funded
by debt. Formulation to find the ratio debt to equity ratio as following (Kasmir, 2010: 158).
Debt to Equity Ratio =
Total Debt
X 100%
Equitas
3.2.4. Profitability
The ratio profitability is the ratio to assess the ability firm in seek. A formula to find return on investment can be
used as following (Kasmir, 2010:202).
ROI =
Profit after interest and taxes
total assets
3.3. Data analysis techniques
3.3.1. Regression analysis linear multiple
This study will uses the multiple regression for analysis impact of variable independent on variables
dependent .This model chosen because this research designed to determine variable independent that have leverage
on variables dependent .Model referred to are as following ( priyatno , 2010) :
Y = α + β 1 X1 + β 2 X2 + β 3 X3 + e
where;
Y
= profitability ( return on investment or roi )
α
= constants
ß1, ß2, ß3
= assessment regression coefficient
X1
= Efficiency working capital working capital turnover
X2
= Liquidity (current ratio)
X3
= Solvability ( debt to equity ratio )
3.3.2. hypothesis testing
The testing of hypotheses done through model linear regression multiple. The significance used in this
research was α = 5 percent.
A coefficient R2 determination
The coefficients determination (R2) for measuring how far the ability models in make clear dependent
variable. Value kd is between 0 and 1. Value r small means the ability variables independent in make clear
dependent variable very limited. Value near 1 means the independent variable put nearly all of the required
information to predict variation independent variable.
Test t statistics
Test t used to see if the independent variable in partial have leverage a significant impact on dependent variable .
Test F statistics
Test f used to test the significance the regression coefficient independent variable in unison dependent on variables.
4. Discussion
4.1. Regression analysis linear multiple
Table 1. Regression analysis linear multiple
Coefficientsa
Unstandardized
Coefficients
Model
1
B
(Constant)
Standardized
Coefficients
Std. Error
Beta
8.024
3.425
WTC
.004
.003
CR
.026
-.010
DER
Collinearity Statistics
t
Sig.
Tolerance
VIF
2.343
.022
.134
1.192
.237
.356
2.811
.006
.472
4.239
.000
.364
2.749
.003
-.409
-3.052
.003
.252
3.973
a. Dependent Variable: ROI
Based on table above, the regression equation is linear multiple in this research is :
Y = α + β 1 X1 + β 2 X2 + β 3 X3 + e
Y = 8,024 + 0,004 X1 + 0,026 X2 – 0,010 X3 + e
The regression equation is on top can explained as follows:
A. constant of 8,024; it means when x1, x2, and x3 value 0 , this value ROI-nya is 8,024 .
B. the regression coefficient variable x1 of 0,004; it means when x1 increased 1 percent, this value ROI will
increased by 0.004 assuming that the variable independent of any other the value remained.
C. the regression coefficient variable x2 of 0,026; it means when x2 increased 1 percent, this value ROI will
increased by 0,026 assuming variable independent of any other value constant.
D. the regression coefficient variable x3 of -0.010; it means when x3 decreased 1 percent, this value ROI will
decrease of 0.010 assuming variable independent of any other value constant.
4.2. Hypothesis Testing
A coefficient r2 determination
Model Summaryb
Model
1
R
.816a
R Square
.666
Adjusted R
Square
.652
Std. Error of
the Estimate
4.76312
Durbin-Watson
1.573
a. Predictors: (Constant), DER, CR, WTC
b. Dependent Variable: ROI
Based on output above, obtained value r square of 0.666 or 66.6 %. Which means that all the independent
variable having influence of 66.6 % dependent on variables. The rest of 33.4 % influenced by other variables.
Variables that might be impact on dependent variable (return on investment) is activity and of the (Kasmir,
2010:151). This is because both variables has a correlation in which large to profitability. So based on it, both
variables above is deemed to be at approximately 33.4 % .
Test t statistics
Test t (test partial) done to see individually influence significantly from variable independent on variables
dependent.
Based on table above on the variables of wct obtained value t count of 1.192, while value of 1.99167 t table.
This means that t count < t table .This item can be concluded that efficiency working capital not have an partial
significant to profitability .
Based on table above on the variables of cr obtained value t count of 4.239, while value of 1.99167 t table.
This means that t count > t table. This item can be concluded that liquidity have an partial significant to profitability.
Based on table above on the variables of der obtained t count of -3.052, while value of 1.99167 t table. This
means that t count > t table. This item can be concluded that the solvability of have an partial significant to
profitability.
Test f statistics
ANOVAb
Sum of
Squares
Model
1
df
Mean Square
Regression
3346.432
3
1115.477
Residual
1678.861
74
22.687
Total
5025.293
77
F
49.167
Sig.
.000a
a. Predictors: (Constant), DER, CR, WTC
b. Dependent Variable: ROI
Test f (test simultaneously) done to see together influence significantly from variable independent on
variables.
Based on table above obtained value f count of 49.167. While f table of 2.73. This means that f count > f
table. This item can be concluded that efficiency working capital, liquidity and solvability together have leverage a
significant impact on profitability.
4.3. Discussion
Based on the results of the analysis data show that on partial efficiency working capital (working capital
turnover not significant to profitability.This indicates that change working capital not affect the change profitability.
More firm many obtaining debt. Debt unusually high forever show it ugly as a creditor will not carelessly
invested, it is the company get trust from a creditor who are certain will the ability to pay debt company.
More firm many invest to the assets fixed (fix assets) in overcome competition in the business world that is
more strict. Of course investment to post assets keeping this would reduce the company profitability, because assets
continue to need a long time or not briefly to successful.
Based on the results of the analysis data show that on partial liquidity (current ratio) significant to
profitability (return on investment). In addition, from the regression analysis obtained the coefficients β that marked
positive, that means that every there was an increase in in current ratio (CR) and will increase return on investment
(ROI).
Van Horne and Wachowicz (2012:262) said if the company deciding capital work in large numbers, the large
as well as the level liquidity company, if other things same. With a greater liquidity, so risk the less, but the
opportunity to derive profit big is going to decreased in the end have an impact on the decline in profitability.
Current ratio according to Van Horne (2009:206) is the ratio and it represents the ability company to pay
short term by using assets the smooth. The higher liquidity, so more all right position company in the sight of a
creditor. By because there were more likely that firms would can pay their obligations on in time.
Based on the results of the analysis data show that on partial solvability (debt to equity ratio) significant to
profitability (return on investment), but having influence negative to return on investment. This indicates that the
debt the long-term are likely is directly proportional to the advantage. This according to the theory expressed by
Riyanto (1995) found that semkin tingggi return on investmen so will reduce debt equity ratio, because debt equity
ratio describe the ability firm in pay off debt.
5. Conclusions and Recommendations
5.1. Conclusion
Based on the results of the analysis and discussions in this research we can conclude that:
1. Efficiency working capital not have an partial significant to profitability in companies listed at the indonesian
stock exchange the period of 2010 to 2015.
2. Liquidity have an partial significant to profitability in companies listed at the indonesian stock exchange the
period of 2010 to 2015.
3. The solvability of have an partial significant to profitability in companies listed at the indonesian stock
exchange the period of 2010 to 2015.
4. Efficiency working capital, liquidity and solvability together have leverage a significant impact on profitability
in companies listed at the indonesian stock exchange the period of 2010 to 2015.
5.2. Suggestion
1. Management company better be improving working capital efficiently and pressed burden of a. As the
company able to achieve advantage desired and able to increase profitability significantly.
2.
3.
4.
Companies should can maintain and guard level liquidity well.The higher the level liquidity, risk the less, this
says that the all right position company in the sight of a creditor.
Companies should see solvabilitasnya level. Company can raise the proportion of funding sources through debt
if it can be managing the source of fund derived from debt well and used for the project investment productive,
that would give positive influence and give the impact on increased profitability company.
To researchers next will expand the number of variable independent other, sector industry other and extend the
period research.
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