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

Jaya Irawan; Marlina Widiyanti; Luk Luk Fuadah; Isnurhadi Isnurhadi

doi:10.21744/ijbem.v5n1.1823

Authors

Jaya Irawan
jayairawan@gmail.com
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.

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