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3. Regression coefficient of current ratio of 0.035 states that each additional 1 from variable current ratio + then the value of Y
ROI will increase by 0.035 which other variables held constant.
c. Coefficient of Determination Test R Square Table 4.11
Coefficients Determination
Model Summary
ยช
Model R
R Square Adjusted R
Square Std. Error of the
Estimate 1
.467
a
.218 .161
6.04663 b. Dependent Variable: ROI
In Table 4.11, obtained a regression model with a coefficient of determination Adjusted R square of 0.161 16.1. The coefficient of
determination indicates that 16.1 ROI can be influenced by working capital turnover, receivables turnover, inventories turnover, and current
ratio. While 83.9 100-16.1 ROI influenced by other variables.
D. Interpretation
Based on the test results found that the receivables turnover has significant effect toward the profitability of the company. Any negative effect
indicates that the smaller the accounts receivable turnover rate will increase the profitability of the company. This is consistent with the theory of Emery
2005, trade receivables are short-term investments are more profitable than
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bonds, high profits play an important role in the addition of accounts receivable, because companies with high profit levels have more cash to lend
to consumers. Lazaridis and Tryfonidiz 2006, examines the Relationship
Between Working Capital Management And Profitability Of Listed Companies in the Athens Stock Exchange. This study aimed to investigate
the relationship between working capital management and profitability of the company. Analysis based on a sample of 131 companies listed on the Athens
Stock Exchange for the period 2001-2004. This study uses descriptive analysis and regression analysis. The results showed a significant negative relationship
receivable turnover, inventory turnover on profitability. Results found in this
study do not correspond with Rahmi 2010 who suggested that accounts receivable turnover has no effect on profitability. Rahmi 2010 conducted a
study on the effect of fixed asset turnover, inventory turnover, accounts receivable turnover toward profitability in real estate and property companies
listed in Indonesia Stock Exchange. The results of this study only variable fixed assets has significant effect toward profitability while inventory turnover
and accounts receivable turnover have no effect toward profitability. Another case study conducted by Pedro, doing research on the effect of working capital
management on SME profitability is conducted using correlation analysis. The results showed that a significant relationship between receivables and
inventories on profitability of SMEs. In this study, current ratio has significant positive effect toward ROI,
but this is contrary to the theory expressed by Van Horne 2005 who stated
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profitability is inversely related between liquidity toward profitability is directly proportional to the risk. In achieving higher profitability should be
aware that the risks faced will be greater. Current Ratio in the study had significant positive impact on profitability. This result means directly
proportional to the profitability and expressed higher level of liquidity, the higher the profitability.
In accordance with research Anggarini 2009, that the current ratio has influence toward profitability of the company. The current
ratio has positive and significant effect toward return on investment ROI. If the current ratio increased or decreased, then ROI will usually experience the
increased or decrease.
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CHAPTER V CONCLUSION AND IMPLICATION
A. Conclusion
Based on the discussion of research results in the previous chapter, it is obtained the following conclusions :
1. Working capital turnover and inventory turnover has no significant
effect toward ROI. 2.
Receivable turnover has negative significant effect toward ROI. These results are consistent with research Siahaan 2007 and Yennis
Andriani 2009. While the current ratio has positive significant impact toward ROI. According to Anggarini 2009, the current ratio has
positive and significant effect toward return on investment. If the current ratio increased or decreased, then the ROI will usually
experience the same thing. Horne and Wachowicz 2005: 313 mentions that the greater of liquidity, the stronger of the financial
condition, and the greater the profit in the company means that the higher the level of risk that funding is used.
3. The value coefficient of determination adjusted R square of 0.161. This means that 16.1 of the return on investment can be explained
independents variable are working capital turnover, receivables turnover, inventory turnover, and current ratio. It can be determined
the value of beta coefficient in the independent variables.
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B. Implication
This study will be useful for certain parties are utilized : 1. For companies
Expected results of this study can help the company in considering funding decisions to be taken, because the funding decisions taken will
affect other decisions and influence survival of the company. Besides that considering the important of working capital, operations,
management of company must use working capital effectively and efficiently . Factors affecting working capital are sales volume, the time
to produce goods, terms of sale, and inventory. So that the management company is able to get profitability.
2. For investor This study is expected to be a consideration in determining and
deciding which investments will be made, because every investor want to get maximum profit. Therefore, investors should be carrefully to take
investment decisions. It is done to avoid the risks of losses that would occur at any time.
3. For academics This study has weaknesses that can be used in consideration for
future research. Such as the short period of only 5 years of research, a limited number of samples, so that further research is expected to add to
the period of the study are used to produce information that is more
