Working Capital, Firm Performance, and Firm Value: An Empirical Study in Manufacturing Industry on Indonesia Stock Exchange

Abstract

This study investigated the effects of working capital policy on firm performance and firm value. The research was conducted by manufacturing companies listed in Indonesia Stock Exchange from 2010 to 2013. Variables used as a proxy for working capital policy are current assets to total assets and current liabilities to total assets. This study uses capital structure as a control variable. Capital structure proxies by leverage. Variables used as a proxy for the performance of the company, namely return on assets, and the value of the company is Tobin’s Q. Methods of data collection use purposive sampling. The results showed that current assets to total assets have an positive, significant effect on firm performance. Current liabilities to total assets and leverage have an negative, significant effect on firm performance. Furthermore, return on asset has an negative, significant effect on the firm value.