Company’s Efficiency and Its Impact on Performance: A Study on State Owned Non-Financial Company Listed on Indonesian Stock Exchange

Augustina Kurniasih, Heliantono
European Research Studies Journal, Volume XXI, Special Issue 3, 211-226, 2018
DOI: 10.35808/ersj/1397


The Indonesian government encourages state-owned companies (BUMN) to be listed on the Indonesia Stock Exchange and perform well. A Company's operating policy is expected to affect company performance. One approach to detect the company's operating policy is through the management of working capital. This study aims to examine the working capital management of non-financial BUMN companies and their impact on the efficiency of the company. In addition, we want to find empirical evidence that efficiency will affect company performance. The study used three independent variables which are days in inventory, days in receivables, and days in payables. The dependent variable is firm performance, as measured by its profitability. Company efficiency is an intervening variable. The results found that the profitability of non-financial BUMN is influenced by its profitability from the previous period . Similarly, the working capital efficiency measured by the cash conversion cycle is significantly influenced by the previous period's cash conversion cycle, and is not significantly affected by the working capital component. There is not enough evidence that working capital efficiency, as an intervening variable, has a significant effect on profitability.

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