Working Capital Management Policies Affecting Profitability and Sustainable Growth Rate of the Listed Companies on the Market for Alternative Investment (MAI)
Keywords:
Working Capital Management Policy, Profitability, Sustainable Growth Rate, MAIAbstract
The purpose of this study was to study the relationship between working capital management policies that affect profitability and sustainable growth rates of 730 companies listed on the Market for Alternative Investment (MAI) by collecting secondary data for a period of 5 years from 2017 - to 2021 of 730 firm-years. The variables used in the study were working capital management policy, profitability, size of business, total asset turnover rate, and sustainable growth rate by using descriptive analysis statistics and path analysis techniques for calculating path coefficients with multiple regression analysis to determine coefficients of variables to direct effect and indirect effect. The results of the study showed that the samples had a conservative working capital management policy which affected the profitability at significance of .05, the current asset investment policy had the same direction at a coefficient of 0.183, while the working capital policy had the opposite direction at a coefficient of -0.313. And the results of the factor path analysis revealed that working capital management policy impacts sustainable growth rate through profitability as a full mediator variable. The return on total assets has a direct effect at the standard coefficient of 0.169, and the working capital management policy has an indirect effect, consisting of the current asset investment policy having a standard coefficient of 0.031 and the working capital financing policy having a standard coefficient of -0.053.
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