Track: Business Management

Abstract

The study examined the effect of working capital management on the profitability of PT. Padumacom Karya Jaya as the company has a problem with its decreasing profit, whereas the company has increasing revenue. This study analyzes the debt ratio, average collection period, average payment period, and current ratio as the independent variables and return on assets as the dependent variable. The data was obtained from the monthly financial report of the company for three years. Classical assumption, descriptive statistics, correlation, and multiple regression analysis are used as the methods to analyze the data used for this study. The findings of this study show that there is significant influence of debt ratio, average collection period, and average payment period on the return on assets, whereas there is no significant influence of current ratio on the return on assets. The three variables have negative impact that can be seen through the regression coefficients of 0.003, 0.042, and 0.0155, respectively. Every increase in each variable will decrease profitability and vice versa. The most significance variable is the average payment period, so the company must be concerned about the period to pay its debt, because when the company is late, the creditor will charge interest to the company and also the company might face the currency inflation when it times to pay the debt because company uses other currency to do the transactions.