The Effect of Cash Turnover, Accounts Receivable and Inventory on Profitability

Abstract

The food and beverage industry is a strategic sector that plays a major role in supporting national economic growth, both through its contribution to Gross Domestic Product (GDP) and its competitiveness in the global market. Amid rapid growth, companies in this sector face significant challenges in maintaining sustainable profitability. One of the key factors in achieving profitability is the efficient management of working capital, particularly cash turnover, accounts receivable turnover, and inventory turnover. Therefore, this study aims to analyze the effect of cash turnover, accounts receivable turnover, and inventory turnover on the profitability of food and beverage companies listed on the Indonesia Stock Exchange (IDX) during the 2019–2024 period.  This research employs an associative approach with a quantitative method. The population consists of 84 food and beverage companies listed on the IDX as of 2024. Through purposive sampling based on specific criteria, 23 companies were selected as research samples. The data used are secondary data obtained from annual financial reports published by the companies. Profitability is measured using Return on Assets (ROA), while the independent variables are cash turnover, accounts receivable turnover, and inventory turnover. Data analysis was conducted using multiple linear regression, along with classical assumption tests to ensure the reliability of the model. The results show significant variations among companies in terms of working capital management efficiency. The average cash turnover was 27.02 times, accounts receivable turnover was 16.14 times, and inventory turnover was 22.73 times during the observation period. Meanwhile, the average ROA was 8.54 percent, indicating a relatively strong profitability level within the sector. The regression model fulfilled all classical assumption tests, including no multicollinearity, no heteroscedasticity, and normally distributed data. The regression analysis revealed that cash turnover, accounts receivable turnover, and inventory turnover all have a positive and significant effect on profitability. This indicates that the more efficiently companies manage these aspects, the greater their ability to generate profits. These findings reinforce the theory that efficient working capital management plays an essential role in improving profitability. In conclusion, optimizing cash turnover, accounts receivable turnover, and inventory turnover is necessary to improve profitability sustainably. Additionally, enhancing operational efficiency and considering external factors are also important to strengthen the financial performance of food and beverage companies in Indonesia.