Saudi Journal of Economics and Finance

Abbreviated Key Title: Saudi J Econ Fin

ISSN 2523-9414 (Print) |ISSN 2523-6563 (Online)
Scholars Middle East Publishers, Dubai, United Arab Emirates
Journal homepage: http://saudijournals.com/sjef/

Original Research Article

The Effect
*
of Working Capital, Liquidity and Leverage on Profitability
Rista Bintara
Accounting Study Program, Faculty of Economics and Business, Mercu Buana University Jl. Raya Meruya Selatan Kembangan 11650 West Jakarta
Indonesia

DOI: 10.36348/sjef.2020.v04i01.005 | Received: 15.01.2020 | Accepted: 22.01.2020 | Published: 24.01.2020

*Corresponding author: Rista Bintara

Abstract
This research was conducted with the aim of: 1) To analyze the effect of working capital turnover on profitability; 2) To
analyze the effect of liquidity on profitability; 3) To analyze the effect of leverage on profitability. This type of research
used in this study is casual associative research (causal associative research). The population of this research are
property, real estate, and building construction companies which are included in the Kompas 100 index which are listed
on the Indonesia Stock Exchange (IDX) in the period 2013-2018. The sampling technique is using purposive sampling
technique. The analytical method used to test hypotheses is multiple regression analysis. The results of the study show
that: 1) Working capital turnover has no effect on profitability; 2) Liquidity has no effect on profitability; and 3)
Leverage has a negative effect on profitability.
Keywords: Working Capital Turnover, Liquidity, Leverage, Profitability.
Copyright @ 2020: This is an open-access article distributed under the terms of the Creative Commons Attribution license which permits unrestricted
use, distribution, and reproduction in any medium for non-commercial use (NonCommercial, or CC-BY-NC) provided the original author and source
are credited.

looking for ways to change the company in order to

INTRODUCTION increase profitability.
In today's modern era, every company must be
able to compete continuously. Increasing competition in According to Nugroho [3] a company can
both the domestic and international markets requires maximize its profits if the financial manager knows the
companies to be able to maintain or gain competitive factors that have a major influence on profitability, the
advantage by giving full attention to the company's company can determine steps to overcome problems
operational and financial activities. and minimize the negative impacts that arise. All
factors contained in a company have an influence on the
The performance of a company's finances is company's ability to make a profit. To maximize each
often evaluated using simple ratios obtained from the of these factors, asset management, cost management
company's financial statements themselves. Kasmir [1] and debt management are needed. In addition,
states that profitability ratios are a value that shows the according to Nugroho, there are many factors that affect
ability of companies in managing and managing assets, a company's profitability. These factors can be
because in calculating profitability ratios basically come measured using financial ratios, financial ratios such as
from financial statements in which there will be found current ratios, working capital turnover, sales growth,
the results of an analysis of a number of ratios which company size and debt ratios, can be used to determine
subsequently the ratio will provide value to certain the effect of each variable on company profitability. In
aspects of the company's financial statements. this study, research will be conducted on working
capital turnover, liquidity (current ratio) and leverage
According to Sartono [2] profitability can (debt ratio) which affect profitability.
measure how much growth a company earns in terms of
sales, assets and profits for its own capital. Management High company growth is preferred to take
is required to increase revenues or operating profits, to advantage of investments that have good prospects. The
finance all company activities, increase assets and pay greater the expected sales, the greater the profitability
off company obligations. The measure of success of a of the company. The increase in sales followed by an
manager can be seen from the ability to create increase in operating results will further increase the
profitability. Increasing profitability is the most confidence of outsiders towards the company. With the
important task for a manager. Managers are constantly increasing confidence of outsiders (creditors), the
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proportion of debt is greater than equity. This is based LITERATURE REVIEW

on the creditor's confidence in the funds invested in the Agency Theory
company guaranteed by the amount of assets owned by Jensen and Meckling [8, 7] explain the agency
the company. As a tool to measure the profitability of a relationship in agency theory that companies are a
company used return on assets (ROA). This ratio is the collection of contracts (nexusof contracts) between
most important ratio among the existing profitability economic resource owners (principals) and managers
ratios. ROA ratio is often used by top management to (agents) who take care of the use and control of
evaluate business units in multidivisional companies resources the. Agency theory (agency theory) arises
[4]. after the phenomenon of separate ownership of
companies with management found in large modern
Working capital is the amount of funds used to companies so that classical corporate theory can no
fund the company's operational activities and to longer be used as a basis for such company analysis.
generate profitability. Investments made by the
company are expected to provide benefits in a short Working Capital Turnover
time. Working capital management is related to the Working capital is needed in carrying out the
company's ability to generate profits [5]. Yulianita & activities of a company, and working capital is very
Isynuwardhana [4] found that working capital turnover important in supporting the smooth operation of the
affects profitability. While research by Wijaya & company's operations, so the company can run well on
Isnaini [6] found that working capital turnover did not an ongoing basis [9]. Working capital is a company's
affect profitability. investment in short-term assets such as cash, securities
(securities), trade receivables and inventories. Net
Another factor that can have an impact on working capital is current assets minus current debt, for
profitability is liquidity. Liquidity ratios provide an example bank loans, promissory notes, trade debts,
overview of a company's ability to settle short-term wages and tax debts.
debt. The high liquidity ratio means better company
performance, because creditors will be interested in According Riyanto [2] Working capital is
providing short-term loans to the company, which always in a state of operation or spinning within the
makes the company's activities run as they should and company as long as the company concerned is in a
will have an impact on the company's profitability [6]. business state. The working capital turnover period
Wijaya & Isnaini [6] found that liquidity affects starts from the time when cash is invested in the
profitability. While research by Yulianita & components of working capital to where it returns to
Isynuwardhana [4] found that liquidity had no effect on cash. The shorter the period means the faster or higher
profitability. the turnover rate. The length of the revolving period of
each component of working capital depends on how
The next factor that is likely to have an impact long the rotation period of each component of the
on profitability is leverage. Good debt management to working capital is. The level of working capital or
finance operational activities can increase company current assets can also be calculated from the balance
profitability. Putra and Badjra [10] suggested that the sheet and income statement at any given time. The
use of debt to fund the company's operational activities formula is as follows:
can provide benefits to the company, but if the company
does not pay attention to the proportion of leverage it
can cause a decrease in profitability because the
accumulated debt will cause a fixed interest expense.
Putranto [10] found that leverage affects profitability. Liquidity
Whereas research by Wijaya & Isnaini [6] found that According to Fahmi [10] Liquidity ratio is the
leverage has no effect on profitability. ability of a company to meet its short-term obligations
in a timely manner. Examples of paying for electricity,
The researcher chose the property, real estate PDAM water, employee salaries, technician salaries,
and building construction company because property, overtime salaries, telephone bills and so on. Therefore,
real estate and building construction companies play an the liquidity ratio is often referred to as short term
important role in the field of economy and development liquidity. Current debt is a payment obligation in one
in Indonesia. This sector is also one indicator to assess a year or a normal operating cycle in business. The
country's economic development. availability of cash sources to meet these obligations
comes from cash or cash conversion from current
Based on the description above, the authors are assets. To measure liquidity the researcher uses the
interested in conducting a study entitled "The Effect of current ratio. Current ratio is the ratio between the
Working Capital Turnover, Liquidity, and Leverage on amount of current assets and current debt [11, 12]. High
Profitability in Property, Real Estate, and Building CR provides a good indication of collateral for short-
Construction Companies that went public in the term creditors in the sense that at any time the company
Kompas 100 Index in 2013-2018". has the ability to pay off short-term financial
obligations. However, a high CR also indicates that

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some working capital is not rotating or experiencing Previous research

unemployment and will negatively affect the ability to Previous research that can support this
obtain profit/profitability [12]. The reduced ability of a research is as follows: Putranto [15] in his research
company to make a profit will also cause a decrease in entitled "The Effect of Diversification, Leverage, and
the returns that will be obtained by investors. Here is Inflation Strategies on the Profitability of Food &
the formula used to calculate the current ratio: Beverage Companies". The results showed that the
diversification strategy had a positive effect on
company profitability, leverage had a positive effect on
company profitability but was not in accordance with
the hypothesis, while inflation did not affect the
Leverage company's profitability.
According to Fahmi [10], leverage ratio is a
measure of how much a company is financed with debt. Wijaya and Isnani [16] in their study entitled
The use of debt that is too high will endanger the "The Effect of Working Capital Efficiency, Liquidity,
company because the company will enter into extreme and Solvency on the Profitability of Pharmaceutical
leverage (extreme debt) that is the company is trapped Companies". The results showed that the Working
in a high level of debt and it is difficult to release the Capital Turnover (WCT), Debt to Equity Ratio (DER)
debt burden. Therefore, the company must balance how partially had a negative and not significant effect on
much debt is worth taking and from which sources can Return on Assets (ROA). Current Ratio (CR) has a
be used to pay off debt. To measure the leverage of positive and significant effect on Return On Assets
researchers using Debt to Equity Ratio (DER). DER is a (ROA).
ratio that illustrates the ratio of debt and equity in
corporate funding and shows the ability of the Yulianita and Isynuwardhana [17] in their
company's own capital to meet all its obligations Sawir, study entitled "The Effect of Working Capital
2000 in Bintara [12]. The formula is as follows: Turnover, Liquidity, and Leverage on Profitability
(Empirical Study of Consumer Goods Companies
Listed on the Indonesia Stock Exchange for the 2015-
2017 Period)". The results showed that simultaneously
showed Working Capital Turnover (WCOT), Liquidity
Profitability (CR), and Leverage (DER) significantly influence
Profitability is the main objective of the Profitability (ROA). Partially, Working Capital
establishment of the company. Profitability plays an Turnover (WCOT) has a significant effect on
important role for the company's future. Companies profitability (ROA), while Liquidity (CR) and Leverage
need to have good profitability for business continuity (DER) have no significant effect on profitability
[13]. Profitability is one indicator to assess the level of (ROA).
effectiveness of management performance in running a
company by looking at the level of benefits obtained Putra & Pangestuti [18] in his research entitled
[14]. To measure profitability, researchers use return on "Effect of Market Structure, Competition,
assets (ROA). ROA is one ratio that measures the level Diversification, and Credit Risk on Bank Profitability
of profitability of a company. ROA is used to determine with Bank Size as a Control Variable (Study of Banks
the amount of net profit that can be obtained from the Listed on the Indonesia Stock Exchange)". The results
company's operations using all of his wealth. High and of this study indicate that market structure, competition
low ROA depends on the management of company and diversification have a significant positive effect on
assets by management that illustrates the efficiency of profitability, but credit risk has a significant negative
the company's operations. The higher the ROA the effect on profitability.
more efficient the company's operations and vice versa,
the lower ROA can be caused by the number of Framework
company assets that are unemployed, investments in Based on the theoretical basis and the results
excess inventory, excess paper money, fixed assets of previous studies and the problems that have been
operating below normal and others occur on the stock raised, then as a basis for formulating a hypothesis, the
exchange [12]. The formula is as follows: following framework is presented in the research model
in the following figure:

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Fig-1.1: Framework

HYPOTHESIS associative-causal research is research that looks for

The research hypotheses proposed are as follows: relationships between two or more variables. The
Ha1 = Working Capital Turnover affects Profitability. purpose of associative research is to look for
Ha2 = Liquidity affects Profitability. relationships between one variable and another.
Ha3 = Leverage affects profitability.
Definition of Variable Operations
RESEARCH METHODS The variables used in this study consisted of
Types of research the dependent variable and the independent variable.
This research is causal research. The type of Operational research variables on the Effects of
research used in this study is casual associative research Working Capital Turnover, Liquidity, and Leverage on
(causal associative research). According to Sanusi [11], Profitability can be summarized in table 1.1.

Table-1.1: Operationalization of Variables

Type of Variable Operational Definition Formula Scale
Dependent
Profitability One indicator to assess the level of effectiveness
of management performance in running a
ROA Ratio
company by looking at the level of benefits
obtained
Independent
Working Capital Working capital is always operating or rotating
Turnover within the company as long as the company Ratio
concerned is in business
Liquidity The ratio used to measure the company's ability
to meet short-term obligations that must be met Current Ratio Ratio

Leverage The ratio used to measure how much the Ratio

company is financed with debt Debt to Equity Ratio

Data Types and Sources selection of samples on the basis of the suitability of the
The data used in conducting this research is characteristics of the sample with the specified sample
secondary data, that is data obtained through selection criteria. The sample criteria used in this study
intermediaries from both parties and certain media that are:
support this research. The data used in this study are  Property, real estate, and building construction
secondary data in the form of financial statements of companies which are included in the Kompas 100
property companies, real estate, and building index which are listed on the Indonesia Stock
construction which are included in the Kompas 100 Exchange (IDX) during 2013-2018.
index listed on the Indonesia Stock Exchange during  Publish audited financial statements for the period
2013-2018 obtained from the Indonesia Stock Exchange 2013-2018
website (www.idx.co.id) and the official website of  The company did not experience a loss during the
each of these companies. study year.
 Data owned by the company are complete and in
Population and Research Samples accordance with the variables studied.
The population in this study are property, real
estate, and building construction companies which are According to the criteria above, the number of
included in the Kompas 100 index which are listed on samples used were 13 companies during the 6 periods
the Indonesia Stock Exchange (IDX) during 2013-2018. namely 2013, 2014, 2015, 2016, and 2018. Then the
The sample is part of the population used to estimate number of samples obtained was 13 companies x 6
population characteristics. The sampling technique is periods = 78 data to be used in this study.
using purposive sampling technique. According to
Widyani [11] the purposive sampling method is the

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DATA COLLECTION TECHNIQUE expectations regarding the Effect of Working Capital

Data collection methods in this study are Turnover, Liquidity, and Leverage Against Profitability.
library study methods and documentation methods. Regression analysis using SPSS software version 25.
Literature study method by studying literature and The regression equation is as follows: Y = α + β1X1
reviewing a variety of literature literature such as +β2X2 + β3X3 + Ɛ1
various journals, articles and other literature books that
support the research process. While the documentation Where:
method is the process of collecting data by recording Y = Profitability
documents related to this study. α = constant or price Y if X = 0
β = number or direction of the regression
ANALYSIS METHOD coefficient, which shows the number of
Descriptive statistics increases or decreases in the dependent
Descriptive statistics in this study are used to variable based on the independent variable
provide a description of the character of the research X1 = Working Capital Turnover
variable using a frequency distribution table that shows X2 = Liquidity
the mode number, the range of scores and the standard X3 = Leverage
of division Ɛ = level of error

Classic assumption test In this study, the significance level (α) of 0.05
This research was conducted with a simple or 5% was used. To test whether the proposed
regression analysis. The use of simple regression hypothesis is accepted or rejected, a test of research
analysis must be free from testing classic assumptions. variables is carried out by simultaneously testing
For this reason, before a simple regression analysis is through the simultaneous significance test (F statistic
carried out, classical assumptions must be tested first. test), which intends to explain the effect of the
Testing classic assumptions is done using the normality independent variable on the dependent variable.
test, multicollinearity test, heterokedasticity test and Meanwhile, to test each variable partially, it is carried
autocorrelation test. out by means of an individual parameter significance
test (statistical t test) which aims to find out whether the
Hypothesis testing independent variable influences the dependent variable,
In this study the authors used three and which of the dominant variables influence the
independent variables and three dependent variables. dependent variable.
The analytical method used to test the hypothesis is the
multiple regression method, namely regression used to RESEARCH RESULTS AND DISCUSSION
find out how much influence the independent variable Research Data Description
has on the dependent variable, with a simple linear The following are descriptive statistical results
regression analysis that aims to meet the researchers' about the research variables as follows:

Table-1.2: Descriptive Statistics Results

Variabel N Minimum Maximum Mean Std. Deviation
X1 78 -0,22 0,40 0,05 0,086
X2 78 0,65 7,76 2,06 1,380
X3 78 0,28 5,37 1,63 1,212
Y 78 0,00 0,22 0,06 0,038
Source: Data processed (2019)

The following are descriptive statistical results Sutera Realty Tbk. in 2018. up to the highest value of
about the research variables as follows: Working 7.76%, namely Bekasi Fajar Industrial Estate company
Capital Turnover Variables have an average value of in 2018. Variable Leverage has an average value of
0.05 times with a standard deviation of 0.086 times, 1.63% with a standard deviation of 1.212%, which
which means large data variations (more than 0.038 means small data variations (less than 0.416% from
times the mean). Working Capital Turnover Variables mean). The Leverage variable ranges from the lowest
range from the lowest value of -0.22 times, namely the value of 0.28%, namely the Adhi Karya (Persero) Tbk
company Alam Sutera Realty Tbk in 2016. up to the company in 2014. to the highest value of 5.37%, the
highest value of 0.40 times the company Alam Sutera Bekasi Fajar Industrial Estate company in 2014. The
Realty Tbk in 2014. Liquidity variables have an average profitability variable measured by ROA has an average
value of 2, 06% with a standard deviation of 1.380%, value of an average of 0.06% with a standard deviation
which means that the data variation is small (less than of 0.038%, which means that the variation of the data is
0.678% of the mean). Liquidity variable ranges from small (less than 0.018% of the mean). The profitability
the lowest value of 0.65%, namely the company Alam variable measured by ROA ranges from the lowest

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value of 0.00%, namely the Sentul City Tbk company Test Prerequisite Analysis
in 2014 to the highest value of 0.22%, the Bekasi Fajar Normality test
Industrial Estate company in 2013. Thus the overall results of the normality test
calculation using the Lilliefors test can be seen in the
summary in table 1.3 below:
Table-1.3: Summary of the Normality Test
L Tabel
No Estimation n Lcount Decision
α = 0.05 α = 0.01
1 Y atas X1 78 -0,0247 0,1003 0,1167 Normal
2 Y atas X2 78 -0,0294 0,1003 0,1167 Normal
3 Y atas X3 78 -0,0748 0,1003 0,1167 Normal
Source: Data processed (2019)

Multicollinearity Test Tabel-1.4: Summary of Multicollinearity Test

The results of the tolerance calculation according Collinearity Statistics
to Table 1.4 show that there are no independent Model Variabel
Tolerance VIF
variables that have a tolerance value of less than 10%; X1 0,998 1,002
all tolerance values are more than 10%; which means 1 X2 0,862 1,159
there is no correlation between variables. The results of X3 0,861 1,161
the calculation of the value of the variance inflation Source: Data processed (2019)
factor (VIF) also show the same thing, there are no
independent variables that have a VIF value of more Autocorrelation Test
than 10; the value of the variance inflation factor (VIF) Autocorrelation test can be done by Durbin-
is all less than 10. The conclusion is that there is no Watson (DW) testing. The results of the autocorrelation
multicollinearity between the independent variables in test can be seen in Table 1.5 below:
the regression model based on the tolerance value test.

Tabel-1.5: Autocorrelation test results

Durbin
Model n K dl du 4-du 4-dl
Watson
1 78 3 1,554 1,713 1,891 2,287 2,447
Source: Data processed (2019)

Referring to Ghozali [11], the regression model in Heteroscedasticity Test

this study is free from the autocorrelation problem The test results using the Spearman rank test can
because the Durbin Watson values are between du and be seen in the following table 1.6:
4 du.
Tabel-1.6: Heteroscedasticity Test Results
X1 X2 X3
Spearman's rho Abres Correlation Coefficient 0,096 0,356** -0,356**
Sig. (2-tailed) 0,403 0,071 0,071
N 78 78 78
Source: Data processed (2019)

Spearman rank test results in the table above Hypothesis test

show the significance value of each variable of 0.403, Multiple regression analysis
0.071, and 0.071. Because the significance value of Multiple regression analysis is used to get the
each variable is greater than 0.05, it can be concluded regression coefficient which will determine whether the
that the data are free from heterocedasticity. hypothesis made will be accepted or rejected. By using
the multiple linear regression method the following
results are obtained:

Tabel-1.7: Results of Regression Analysis

Model B Tcount Sig Ttabel adj R2 Fcount Sig
(Constant) 0,080
X1 0,064 0,144 1,348
1 1,665 0,121 4,542 0,006
X2 -0,003 -0,112 -0,971
X3 -0,013 -0,399 -3,469
Source: Data processed (2019)

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Based on the results of the regression tests states that working capital turnover has no effect on
above, an equation can be formed as follows: Y = 0,080 profitability. But contrary to research conducted by
+ 0,064X1 - 0,003X2 - 0,013X3 + Ɛ1 Yulianita and Isynuwardhana [17] which states that
working capital turnover affects profitability.
Determination Coefficient Test (R2)
From table 1.7 it is known that the adjusted R Based on the data obtained shows that during
square value is 0.121. This means that 12.1% of the 2013-2018 the level of working capital turnover in the
profitability variable measured by ROA can be sample companies experienced an unstable increase and
explained by the variation of the independent variables decrease. This is due to the increase and decrease in
namely Working Capital Turnover, Liquidity and profitability not only reflected in working capital
Leverage, the remaining 76.1% (100% - 23.9%) is turnover, but there are other factors that affect
explained by other causes outside the model. profitability. This can be seen from the data that has
been processed which shows that information about the
Simultaneous Significance Test (Statistical Test F) increase or decrease in working capital turnover is not
From the Anova test or the F test in table 1.7 always followed by an increase and decrease in
above, the calculated F value is 4.542 with a profitability in the sample companies.
significance probability that indicates 0.006. Test
probability values are much smaller than α = 0.05. This Liquidity affects profitability
shows that together (simultaneously) Profitability Based on partial research results, it can be seen
variables measured by ROA can be explained by that liquidity has no effect on profitability. These results
variations in independent variables namely Working indicate that any increase in variable liquidity cannot
Capital Turnover, Liquidity and Leverage. increase profitability. This means that the high or low
ability of companies to pay short-term obligations does
Significance Test of Individual Parameters (t Test) not affect the size of the profits received by the
T test is performed to determine whether the company. Cash and inventory turnover owned by the
independent variables in the regression model have an company from its working capital is used to pay short-
individual effect on the dependent variable. To term obligations with no effect on corporate profits.
determine whether a hypothesis is accepted or rejected
is to compare t arithmetic with ttable and the The results of this study are in line with
significance value in this study using a significance research conducted by Yulianita and Isynuwardhana
level of 0.05. In this case, the table value is 1.665. [17] which states that liquidity has no effect on
profitability. But contrary to research conducted by
Partial test results (t test) in table 1.7 above Wijaya and Isnani [16] which states that liquidity
indicate that the variable working capital turnover does affects profitability.
not affect profitability, which can be seen from the
comparison between ttable and tcount, namely ttable> tcount, Leverage affects profitability
with a value of ttable 1.665 and tcount 1.348 and a Based on partial research results, it can be seen
significance level that is located above 0.05. Thus Ha 1 that leverage has a negative effect on profitability.
was rejected. These results indicate that any increase in leverage can
reduce profitability. Companies that have high DER
Liquidity variable does not affect profitability, tend to have low ROA. Conversely companies that have
which can be seen from the comparison between ttable a low DER tend to have high ROA. DER illustrates the
and tcount, namely ttable> thitung, with a value of ttable 1.665 extent to which owner's capital can cover debts to
and tcount -0.971 and a significance level above 0.05. outside parties [19]. The smaller the DER, the better.
Thus Ha2 rejected. For the security of outsiders the best ratio if capital is
greater than the amount of debt or at least the same. A
The leverage variable has a negative effect on high DER value influences ROA acquisition, which
profitability, which can be seen from the comparison causes the acquisition of a company's ROA value to be
between ttable and tcount, namely ttable <tcount, with a ttable low. This is due to the payment of fees incurred by a
value of 1.665 and tcount -3.469 and a significance level higher debt or loan. Declining corporate profits cause
below 0.05. Thus Ha3 received. the value of ROA to be low.

DISCUSSION The results of this study are in line with

Working capital turnover affects profitability research conducted by Yulita, et al. [17] and Yulianita
Based on partial research results, it can be seen & Isynuwardhana [17, 20] that leverage affects
that working capital turnover has no effect on profitability.
profitability. These results indicate that any increase in
variable working capital turnover cannot increase CONCLUSIONS
profitability. The results of this study are in line with Based on the results of the analysis and
research conducted by Wijaya and Isnani [16] which discussion that has been carried out, the following

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 Rista Bintara., Saudi J Econ Fin, Jan 2020; 4(1): 28-35

conclusions can be drawn: 1) Working capital turnover Resepsi Estetis HB Jassin terhadap Al-
has no effect on profitability; 2) Liquidity has no effect Qur’an. Journal of Qur'an and Hadith
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Manajemen Keuangan. Bandung: Alfabeta
SUGGESTIONS 11. Munawir, S. (2010). Analisa Laporan Keuangan
By considering the existing limitations, it is (edisi keempat). Yogyakarta: Liberty
expected that future research will improve the following 12. Rista Bintara dan Putri Renalita Sutra Tanjung.
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must consider and consider the effect of liquidity on Return. International Journal of Academic
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the company must be used sufficiently for the purposes Management Sciences, 9(2).
and company investment, so that the profits obtained by 13. Dari, W., Harnovinsah. (2017). Pengaruh Resiko
the company increase .. 2) For investors, in determining Kredit (Non Performing Loan),Tingkat Kecukupan
the financial strategy can consider the funding decision Modal (Capital Adequacy Ratio), dan Loan to
factors relating to the portion of debt. Investors should Deposit Ratio terhadap Tingkat Profitabilitas
be careful about investing in companies with high debt pada Perusahaan Perbankan yang terdaftar di
structures because they have a high risk of bankruptcy. BEI Periode 2012-2015. Profita, 10(3).
Investors are advised to choose to invest in large 14. Indracahya, E., & Faisol, D.A. (2017). The Effect
companies that are more established in terms of total of Good Corporate Governance Elements,
assets and companies that have a good level of Leverage, Firm Age, Company Size and
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conduct further research using different company Study of Manufacturing Companies in Bei 2014–
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