Research Objectives Benefits of Research

15 a. General nature or type of company Working capital of a companys services will be relatively lower when compared with working capital requirements of the company it self, due to service company does not require a large investment in cash, receivables and inventories. b. The time required to produce or obtain goods and the cost of production per unit or price of the goods Working capital needs of a company is directly related to the time required to acquire the goods that will be sold as well as the basic material to be produced until the goods are sold. The longer the time required to manufacture or acquire such goods, the greater the working capital needed. Terms of the purchase of materials or merchandise Terms of the purchase of merchandise or raw materials that will be used to produce goods greatly affect the working capital required by the company. If credit terms are accepted at time of purchase benefits, so little cash that must be invested in the stock of materials or merchandise or otherwise. c. Terms of sale The more soft loans to buyers of the company will lead to the large amount of working capital invested in the sector accounts. d. Inventory turnover rate Inventory turnover rate indicates how many times inventory is replaced in the sense that bought and resold. The higher of inventory turnover rate is the amount of working capital required lower and will 16 minimize the risk of loss due to the decline in prices or changes in consumer taste, but it will save the cost of storage and maintenance of the supplies.

3. Sources of Working Capital

According to Munawir 2004: 120, sources of working capital of a company can be derived from: a. Companys operating results, is the amount of net income that appears in the statement of income plus depreciation and amortization, this number indicates the amount of working capital from the operating results of the company. b. Profits from the sale of marketable securities c. Sales of fixed assets, long-term investments and other assets not smooth. d. Sale of bonds and stocks as well as contribution of funds from the owners e. Borrowing funds from banks and other short-term loans. f. Credit from a supplier or trade creditor

4. Use of Working Capital

According to Djarwanto 2004: 98, the use of working capital is reduced current assets: a. Short-term spending and short-term debt payments including dividends payable. 17 b. Any usage prive which is from profits on a proprietorship or partnership. c. Loss of business or loss incidental which is required cash expulsion. d. Establishment of a fund for a specific purpose such as pension funds, bond debts payment, which had matured, the replacement of non-current assets. e. Additional purchases of fixed assets, intangible assets, and long-term investments.

5. Types of Working Capital

According to Sjahrial 2007: 104, working capital can be divided into two types, is : a. Permanent Working Capital Permanent working capital is working capital that run the daily company operations. Without a working capital has resulted in the operation will be stop. Working capital divided by: 1. Primary working capital The primary working capital is the minimum amount of working capital that should be by company to ensure business continuity. 2. Normal working capital Normal working capital is required to meet a necessary fit of production capacity dynamically.