Problem Formulation Purpose of The Research
while the shortage of the inventories will generate the company unable to make the profit because the client canceled to buy the products of the company so there
is no such receivable. Munawir 2004
Zariyawati et al. 2009 stated that working capital is an important issue in corporate financial decisions. Management working capital is the efforts of the
company to maintain the liquidity of the company in daily operations which can run well while on the other hand the company can still suffice the short term
obligations. The manager of the company who cannot manage a company with good working capital will affect the growth and the profitability of the company
which will eventually bring the company to the financial distress and bankruptcy.
Wijaya 2010 stated that the main goal of the company is improving the value of the company. The companies should always try to make the right decisions with
the purpose of increasing the profits and optimising the value of the company. Dong Su 2010 Explains that one of the important financial decisions for the
company is the management of working capital. The main objective of working capital management is providing sufficient support for the running of the business
of the company. Management of the efficient working capital management plays an important role in the strategy of the company, especially the effort to create the
value for the company. The problem that arises is the increase in the corporate profits which could sacrifice aspects of the liquidity of the company. Therefore,
the companies must be able to balance the goal of maximising profit and the efforts to maintain the liquidity of the company since both are equally important
to the company.
The According to Munawir 2004, the short-term financial management is the management of current assets and current liabilities of the company. The goal of
short-term financial management is managing each current assets of the company cash, marketable securities, accounts receivable and inventories and liabilities
accounts payable, notes payable, accrued liabilities to achieve a balance between the profit and the risk which can make a positive contribution to the value of the
company, for instance:
1.
Current assets in large amounts consequently reduce the profits.
2.
Current assets in small amounts, as a result, increase the risk of non-payment.
3.
Current liabilities in large amounts consequently may increase the risk which cannot pay at the due date.