The effect of net trade cycle, firm size, and networking capital on profitability with cash holdings as intervening variables in cement companies in Indonesia

https://doi.org/10.21744/ijbem.v5n1.1823

Authors

  • Jaya Irawan Master of Management, Sriwijaya University, Palembang, Indonesia
  • Marlina Widiyanti Lecturer of Magister Management, Economic Faculty, Sriwijaya University, Palembang, Indonesia
  • Luk Luk Fuadah Lecturer of Magister Management, Economic Faculty, Sriwijaya University, Palembang, Indonesia
  • Isnurhadi Lecturer of Magister Management, Economic Faculty, Sriwijaya University, Palembang, Indonesia

Keywords:

cash holdings, cement, company size, net trade cycle, net working capital, return assets

Abstract

This study aims to examine a model that hypothesizes that the net trade cycle, company size, and net working capital of cement companies in Indonesia impact achieving a return on assets as a proxy for profitability through the company's cash holdings. The sample consists of 45 cement producers in Indonesia that have produced commercially before 2011 and regularly publish company annual reports. The results of the path analysis confirm that the net trade cycle, firm size, and networking capital do not affect the return on assets as a proxy for profitability. Likewise, statistically, it still shows the same results after being mediated with cash holdings. Moreover, found the effect of cash holdings on ROA. These findings can provide a starting point for further research to find a more appropriate formula to increase profitability, especially for companies in the cement sector in Indonesia, where utilization rates tend to be low, and market conditions are becoming very competitive.

Downloads

Download data is not yet available.

References

Aktas, N., Croci, E., & Petmezas, D. (2015). Is working capital management value-enhancing? Evidence from firm performance and investments. Journal of Corporate Finance, 30, 98-113. https://doi.org/10.1016/j.jcorpfin.2014.12.008

Ali, M., Kan, K. A. S., & Sarstedt, M. (2016). Direct and configurational paths of absorptive capacity and organizational innovation to successful organizational performance. Journal of business research, 69(11), 5317-5323.

Baños-Caballero, S., García-Teruel, P. J., & Martínez-Solano, P. (2014). Working capital management, corporate performance, and financial constraints. Journal of Business Research, 67(3), 332-338. https://doi.org/10.1016/j.jbusres.2013.01.016

Begley, T. M., & Boyd, D. P. (1987). Psychological characteristics associated with performence in entrepreneurial firms and smaller businesses. Journal of business venturing, 2(1), 79-93. https://doi.org/10.1016/0883-9026(87)90020-6

Burawoy, M. (2009). The extended case method. University of California Press.

Campbell, S. (2014). What is qualitative research?. Clinical Laboratory Science, 27(1), 3.

Chistian, N., & Fauziah, F. (2017). Faktor-faktor penahanan dana (cash holding). Global Financial Accounting Journal, 1(1), 13-24.

Dongxue, L., Xinhua, F., Xuequan, W., & Mingshu, T. (1997). Durability study of steel slag cement. Cement and Concrete Research, 27(7), 983-987. https://doi.org/10.1016/S0008-8846(97)00084-7

Han, S., & Qiu, J. (2007). Corporate precautionary cash holdings. Journal of corporate finance, 13(1), 43-57. https://doi.org/10.1016/j.jcorpfin.2006.05.002

Heale, R., & Twycross, A. (2015). Validity and reliability in quantitative studies. Evidence-based nursing, 18(3), 66-67.

Hommes, C. H. (1995). A reconsideration of Hicks' non-linear trade cycle model. Structural change and economic dynamics, 6(4), 435-459. https://doi.org/10.1016/0954-349X(95)00032-I

Kawakibi, A. A., & Hadiwidjojo, D. (2019). The Effect Of Working Capital Management On Company Profits And Values (Study Of Cement Companies Listed On The Indonesia Stock Exchange).

Kim, K. (2019). Using partially state-owned enterprises for development in Indonesia. Asia Pacific Business Review, 25(3), 317-337.

Lepetit, L., & Strobel, F. (2013). Bank insolvency risk and time-varying Z-score measures. Journal of International Financial Markets, Institutions and Money, 25, 73-87. https://doi.org/10.1016/j.intfin.2013.01.004

Nijam, H. M. (2016). Cash conversion cycle, its properties and profitability: Evidence from listed hotel companies in Sri Lanka. Cash Conversion Cycle, Its Properties and Profitability: Evidence from Listed Hotel Companies in Sri Lanka. Research Journal of Finance and Accounting, 7(1), 23-32.

Niresh, A., & Thirunavukkarasu, V. (2014). Firm size and profitability: A study of listed manufacturing firms in Sri Lanka. International journal of business and management, 9(4).

Opler, T., Pinkowitz, L., Stulz, R., & Williamson, R. (1999). The determinants and implications of corporate cash holdings. Journal of financial economics, 52(1), 3-46. https://doi.org/10.1016/S0304-405X(99)00003-3

Prabowo, F. A., & Rusdiansyah, A. (2018). Ebitda Gain Optimization Using Strategy Allowcation Of Market Share Distribution In Xyz Company: A Case Study In Indonesia.

Putra, M. D. P., Widanaputra, A. A. G. P., Ramantha, I. W., & Gayatri, G. (2020). The effect of organizational commitments in auditor performance with dysfunctional audit behavior as mediation variables. International Research Journal of Management, IT and Social Sciences, 7(1), 45-52. https://doi.org/10.21744/irjmis.v7n1.812

Qu, S. Q., & Dumay, J. (2011). The qualitative research interview, Qual. Res. Account. Manage., 8, 238–264.

Raffo, A. (2008). Net exports, consumption volatility and international business cycle models. Journal of International Economics, 75(1), 14-29. https://doi.org/10.1016/j.jinteco.2007.10.001

Shiqun, L., Jiashan, H., Biao, L., Guohui, Z., Wei, C., Qi, W., & Ning, Z. (1999). Fundamental study on aluminophosphate cement. Cement and concrete research, 29(10), 1549-1554. https://doi.org/10.1016/S0008-8846(99)00111-8

Subiyanto, E. (2020). A failure innovation strategy of acquisition during excess capacity: financial approach based on case study at the state-owned cement holding PT Semen Indonesia (Persero) Tbk. Journal of Innovation and Entrepreneurship, 9(1), 1-14.

Suryanata, I. G. N. P., & Pemayun, A. G. P. (2018). Contribution of business society credit increasing for society income: Tambawu village Denpasar Bali. International Research Journal of Management, IT and Social Sciences, 5(4), 71-79. https://doi.org/10.21744/irjmis.v5n4.265

Tawfeeq, A. A., Mahdi, M. F., Abaas, I. S., & Alwan, A. H. (2018). Isolation, quantification, and identification of rosmarinic acid, gas chromatography-mass spectrometry analysis of essential oil, cytotoxic effect, and antimicrobial investigation of Rosmarinus officinalis leaves. Asian J Pharm Clin Res, 11(6), 126-132.

Yilmaz, I., & Acar, G. (2019). The effect of cash conversion cycle on profitability in Omani companies. International Journal of Economics, Management and Accounting, 27(2), 269-290.

Published

2022-01-07

How to Cite

Irawan, J., Widiyanti, M., Fuadah, L. L., & Isnurhadi, I. (2022). The effect of net trade cycle, firm size, and networking capital on profitability with cash holdings as intervening variables in cement companies in Indonesia. International Journal of Business, Economics & Management, 5(1), 6-10. https://doi.org/10.21744/ijbem.v5n1.1823

Issue

Section

Peer Review Articles

Most read articles by the same author(s)

1 2 > >>