AUTHORS:
Moch. Edman Syarief
Ita Prihatining Wilujeng
ABSTRACT:
The purpose of this article is to set industry benchmarks for cash conversion cycle (CCC) of manufacturing companies, and to examine the relationship between the length of the CCC and the size of the firms, the length of the CCC and profitability, and the length of the CCC and working capital management. Data of this study is collected from the summary of financial statements of the manufactured corporations listed in Indonesian Stock Exchange (IDX) published by Indonesian Capital Market Directory for the year of 2006. The authors utilized ANOVA and Kendall’s Tau correlation analysis as empirical examination. The results of this research are as follows. From 141 corporations within 19 industries, the lowest means value of the CCC is found in the Textile Mill Products industry, with 22,47 days average and the highest mean value of the CCC is found in the Adhesive industry with an average of 400,42 days. There is a significant negative correlation between CCC and the firm size, significant negative correlation between CCC and assets management (CA/TA), and significant positive correlation between CCC and liabilities management (CL/TA). There is not enough evidence for significant correlation between CCC and profitability in this manufacturing industry. The industry benchmarks for CCC valid for the members of manufacturing industry only. Suggestion for the next study is to find out about the determinant of working capital management and its relationship with agency cost and also about the significance level of inventory.
Keywords: Cash Conversion Cycle, Firm Size, Profitability, Working Capital Management.FULL TEXT: FREE DOWNLOAD
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