DINAMIKA WORKING CAPITAL EFFICIENCY DAN FIRM PERFORMANCE PADA PERUSAHAAN MANUFAKTUR DI INDONESIA

Abstract

ABSTRACT

The manufacturing sector plays a critical role in Indonesia’s economic development, requiring financial efficiency to navigate challenges such as globalization, competition, and technological advancements. Despite its importance, inefficiencies in working capital management (WCM) persist, leaving gaps in understanding its impact on firm performance, particularly in emerging markets like Indonesia. This study examines the influence of working capital efficiency (WCE), measured through Net Trade Cycle (NTC) and its components, on Tobin's Q (market-based) and Return on Equity (ROE, accounting-based) among 226 Indonesian manufacturing firms over the period 2010–2023 using panel data regression. The results reveal that NTC has no significant impact on Tobin’s Q, while inventory days (INVD) show a significant negative effect, suggesting that inefficient inventory management diminishes market value. For ROE, NTC, INVD, and receivable days (RECD) have significant negative effects, highlighting the adverse impact of prolonged cash conversion cycles on profitability. These findings align with theoretical expectations that shorter working capital cycles enhance profitability by reducing financial costs and improving cash flow. The implications underscore the need for targeted WCM strategies to optimize liquidity and profitability, contributing to a more competitive manufacturing sector in Indonesia. Future research should explore external moderating factors such as macroeconomic conditions and industry dynamics to provide a comprehensive understanding of WCE’s influence on firm performance.

Keywords: Working capital efficiency, Firm performance.