By
Dimas Ramadhan Pangestu 13411065
BACHELOR’S DEGREE in
ACCOUNTING
FACULTY OF BUSINESS ADMINISTRATION AND HUMANITIES
SWISS GERMAN UNIVERSITY EduTown BSD City
Tangerang 15339 Indonesia
August 2015
STATEMENT BY THE AUTHOR
I hereby declare that this submission is my own work and to the best of my knowledge, it contains no material previously published or written by another person, nor material which to a substantial extent has been accepted for the award of any other degree or diploma at any educational institution, except where due acknowledgement is made in the thesis.
Dimas Ramadhan Pangestu
Student Date
Approved by:
Ir. Yosman Bustaman, MBA
Thesis Advisor Date
Prof. Eric Jos Nasution, MBA, MA, Ph.D
Dean Date
ABSTRACT
ANALYSIS OF WORKING CAPITAL ON PROFITABILITY TO CONSUMER GOODS INDUSTRY YEAR PERIOD: 2010 – 2014
By
Dimas Ramadhan Pangestu Ir. Yosman Bustaman, MBA
SWISS GERMAN UNIVERSITY
This study are focusing on the relationship between working capital and profitability, many factors that affect these relationship are occur in the result of this study. Also, the sample of this study will be taken from companies that are majoring in the consumer goods sector in year 2010-2014. The author has already make a research about each variables that will be affecting in the relationship of working capital to profitability, the variables that will be included in this research are working capital leverage, average collection period, inventory turns in days, average payment period, cash conversion cycle. Sales growth, current ratio, quick ratio and inflation are used as the control variables on profitability. The author will adapt more about this subject, from the previous study that already been done before, so this study will take two dependent variables to measure profitability, ROA and STD ROA (risk). To make this study more interesting and various, the author uses a new measurement to profitability which is STD ROA (risk). E-views will be used to generate the result from fix effect model and random effect model that will be applied to analyze the relationship between the dependent and independent variables, and some test will be taken to make sure the model is valid and reliable. Results have been acquired in the study, some results are not the same as the previous study has acquired and some has the same results as the previous study.
Keywords: Profitability, Risk, Working Capital, Cash Conversion Cycle
© Copyright 2015 by Dimas Ramadhan Pangestu
All rights reserved
DEDICATION
I dedicate this thesis to my beloved family who always be supportive to my collage
activity, to my friends that always be there for me whenever I faced a problem, and
last for my favorite lecturer Mr. Yosman Bustaman who helped me a lot me during
this work of thesis.
ACKNOWLEDGEMENTS
First of all I want to thank to God, Allah SWT, for his blessings so that my thesis can finally be done in time. Because during of my thesis completion I have so many troubles and problems that I have to be faced for some many reasons. And with the countless blessing that God already gave to me I can never enough say thank for indirectly helping me out through this thesis completion process.
And also I give my thanks to the readers, hope that this thesis would be able to help all the readers to improve their knowledge about this study. And I know that this thesis is not as perfect as other study, so I need more suggestion from readers about this thesis to be more accurate.
Also I would like to thanks the people that surround me with their love and helping me out during this thesis:
My beloved parents Indriani Dwi Riyono and Roedhy Dwi Riyono for giving me the chance to take study at SGU and also their being supportive to me all the time. So that I can complete this thesis with their prayers also.
My Favourite Lecturer Mr. Yosman Bustaman which always giving me his best knowledge to teach me anything about this study, so I can finish this study in time before the deadline. Also he always giving me guidance during this thesis work process to be in the correct order.
My sister Viola Wanda Aini who always giving her time free for me, to accompanying me to complete this thesis.
My Lovely Girlfriend Fitri Purnamasari who always giving her attention and support to me so that I can be more focus on finishing this thesis. And she always prays for my thesis to be completed.
Many other lecturer that also helping me out to guide me during this thesis progress Mr. Indra Pratama, Ms. Neneng Djuaeriah, Mr. Bobby Wiryawan, Ms. Liana Rahardja, Ms. Imelda Suardi, Mr. Alex Munaf. And others lecturer that I can’t mentioned one by one that already give me their knowledge for me during my study at Swiss German University.
My lovely friends which I already consider them as my family, William
Hanitio, Bayu Ramadhan, Ricardo Jose Guedez, Auzan Eykbal, Taffito
Tikoalu, Judadarman Joenoes, Calvin Valentino Fang. Also to my best buddy in class Risqi Adityawarman, Fadhel Ghoffur, Fadjrin. And for my whole classmates that I can’t mentioned one by one, without them I cannot finish my thesis on time, because their support is one of the most important thing in this process of completing the thesis.
To my thesis partner Artalia Indah Roossiana and Clara Anastasia Elvira that giving her best contribution to help me out with the excel problem and other thing during this thesis process completion.
To my accounting senior Harsya Alaiska Imanda for helping me explain about
thesis is all about.
TABLE OF CONTENTS
STATEMENT BY THE AUTHOR ... 2
ABSTRACT ... 3
DEDICATION ... 5
ACKNOWLEDGEMENTS ... 6
CHAPTER 1 - INTRODUCTION ... 11
1.1 Background ... 11
1.2 Research Problem ... 14
1.3 Research Objectives ... 15
1.4 Research Questions ... 15
1.5 Significance of Study ... 15
1.6 Scope of Work and Limitation ... 16
1.7 Thesis Structure ... 16
CHAPTER 2 - LITERATURE REVIEW ... 17
2.1 Working Capital ... 17
2.2 Cash Conversion Cycle ... 19
2.2.1 Average Collection Period ... 21
2.2.2 Inventory Turnover in Days ... 21
2.2.3 Average Payment Period ... 22
2.3 Profitability ... 23
2.4 Return on Asset ... 23
2.5 Standard Deviation ROA ... 24
2.6 Working Capital Leverage ... 24
2.7 Current Ratio ... 25
2.8 Quick Ratio ... 26
2.9 Consumer Goods Industry Growth in Indonesia ... 27
2.10 Previous Study ... 29
2.11 Differentiation from Previous Study ... 39
2.12 Theoretical Frameworks ... 39
CHAPTER 3 – METHODOLOGY ... 41
3.1 Population and Sampling ... 41
3.2 Data Sources and Collection ... 44
3.3 Research Model and Variables ... 45
3.4 The Purpose of the Study ... 47
3.5 Method and Data Analysis ... 47
3.5.1 Regression Analysis ... 48
3.5.2 Panel Data Usage ... 48
3.5.3 Chow Test ... 49
3.5.4 F Test ... 50
3.5.5 T Test ... 50
3.5.6 Goodness Fit of Statistic (R²) ... 50
3.5.7 Autocorrelation ... 50
3.5.8 Multicollinearity ... 50
3.5.9 Heteroscedasticity ... 50
3.6 The Model Specification ... 51
3.7 Hypothesis ... 51
3.7.1 Hypothesis Model 1 ... 51
3.7.2 Hypothesis Model 2 ... 51
CHAPTER 4 - RESULT AND DISCUSSION ... 52
4.1 Company Profile ... 52
4.2 Data Processed ... 55
4.3 Descriptive Statistic ... 55
4.3.1 ROA Statistic ... 56
4.3.2 Standard Deviation ROA Statistic ... 57
4.3.3 Working Capital Statistic ... 59
4.3.4 Cash Conversion Cycle Component Statistic ... 60
4.3.5 Sales Growth Statistic ... 62
4.3.6 Current Ratio Statistic ... 63
4.3.7 Quick Ratio Statistic ... 63
4.3.8 Inflation Statistic ... 63
4.4 Result Analysis Model 1 ... 64
4.4.1 Common Effect Model ... 64
4.4.2 Fixed Effect Model ... 66
4.4.3 Chow Test ... 70
4.4.4 Random Effect Model ... 70
4.4.5 Hausman Test ... 72
4.4.6 Normality Test Model 1 ... 73
4.4.7 Heteroscedasticity Test Model 1 ... 73
4.5 Result Analysis Model 2 ... 74
4.5.1 Common Effect Model ... 74
4.5.2 Fixed Effect Model ... 75
4.5.3 Chow Test ... 78
4.5.4 Random Effect Model ... 79
4.5.5 Hausman Test ... 80
4.5.6 Normality Test Model 2 ... 81
4.5.7 Heteroscedasticity Test Model 2 ... 81
4.6 Multicollinearity Test ... 82
CHAPTER 5 - CONCLUSION AND RECOMMENDATION ... 83
5.1 Conclusion ... 83
5.2 Recommendation ... 84
GLOSSARY ... 85
REFERENCES ... 86
APPENDICES ... 88
CURRICULUM VITAE ... 97
