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the time billed as a whole. Precision current ratio according to Tunggal 2000: 155 depends on many factors, which are as follows:
a. Accepted credit terms from suppliers than with credit terms granted by the company to the buyer,
b. The time it takes to collect receivables, c. Inventory turnover,
d. Characteristics of the companys financial program, e. Season of the year in question,
f. Conjuncture situation, g. Working capital cycle length,
h. Whether the company was looking to generalize be reduced. The formula for the current ratio or current ratio can be used as follows:
C. Profitability
1. Understanding Profitability
Profit in operations is an important element to to ensure the survival in the future. The companys success can be seen from the ability of the company
makes a profit, the companys ability to compete in the market, and the ability of the company to be able to expand the business.
According to Gitman 2003: 599: profitability is the relationship between revenues and costs generated by using the firms assets - both current
Current Ratio = Current Assets Current Liabilities
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and fixed - in productive activities. Brigham and Houston 2001: 89 said the profitability is the net result of a series of policies and decisions.
Second opinions concluded that profitability is ability of company to make a profit by using available capital. Managerial performance of each
company will be able to say well if, the level of profitability of the company that manages high or in other words the maximum, where profitability is
generally always be measured by comparing the profits from the company with a number of estimates that a measure of success of the company. There
are several ways to measure the profitability of a company. a. Gross profit margin GPM
The measurement of the percentage of any proceeds after the sale of the company to pay the cost of goods sold. The higher gross profit margin,
the better. b. Operating profit margin OPM
The measurement of the percentage of any sale proceeds leftover after all expenses and other expenses reduced, except for interest and taxes.
c. Net profit margin NPM The measurement to quantify the percentage of corporate profits
after deducting all costs of expenses including interest and taxes.
