Abstract
The purpose of this study is to investigate the effect of working capital investment and working capital financing on the operational risk of nine listed firms in the agricultural sector of the Indonesian Stock Exchange. The time period used is 12 years from 2008 - 2019. The operational risk variable is the deviation absolute value of ROA, ROE, Sales and Cost of Goods Sold. The independent variable is the working capital investment strategy (WCIS) and Working Capital Financing Policy (WCFS). For control variables using debt ratio, size, age and current ratio variables. The analysis technique used is Ordinary Least Square (OLS) regression. The results obtained by shows that (1) WCIP have a negative and significant impact on the risk of ROA and ROE, (2) WCIP has a positive and significant effect on the risk of sales and CGS, (3) WCFP has a positive and significant impact on the risk of ROA and ROE, however, (4) WCFP has a negative and significant effect on the risk of sales and CGS. Debt ratio only has a positive effect on ROE risk. Company asset size has a positive and significant effect on Sales and CGS. Company age has a positive and significant effect on ROE risk. The current ratio variable has a positive effect on ROE risk and has a negative effect on the risk of sales and CGS.
Highlights
The management of sources and use of funds in the company can be grouped into 2 parts, namely management of short-term sources and uses of funds and management of long-term sources and uses
FIRM return on assets (ROA) ROE SALES CGS WC Investment P WC Financing P Debt Ratio Size Age Current Ratio Valid N. For dependent variables such as ROA, ROE, Sales and GCS it can be explained as follows: The average value of ROA is 0.0635 or 6.35 percent, with a minimum value of - 58 or -58 percent obtained by UNSP companies in 2019 and a maximum value 0.84 or 84 percent was obtained by the BISI company in 2019
Whereas for independent variables such as working capital investment strategy (WCIS) and working capital financing strategy (WCFS) it can be explained as follows: On average, the WC investment policy value is 0.2944 or 29.44 percent, meaning that the average value is below 0.5 or below 50%, so it can be said This company in the Agriculture Industry uses an aggressive working capital strategy
Summary
The management of sources and use of funds in the company can be grouped into 2 parts, namely management of short-term sources and uses of funds and management of long-term sources and uses. Management of sources and use of short-term funds is known as working capital management. Working capital is part of the source and use of short-term funds (Bhunia, 2010). This working capital is very important for the company, because this working capital element is related to the company's day-to-day activities. Working capital needs to be managed properly. According to (Appuhami, 2008) good working capital management will be able to bring companies to have the ability to compete in the market because they have a good competitive advantage (Boisjolya, Conine Jrb, & McDonald IV, 2020)
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