Liquidity Management as an Effect to Operational Performance and Firm Value
Abstract
Classical theory affirms that effective liquidity management will increase operational performance and firm value. The purpose of this research is to verify the correctness of the theory, by examined the effect of liquidity management to operational performance and firm value. Liquidity management which is examined in this research using the measurement variable of Cash Conversion Cycle (CCC), while the variable for measuring operational performance using ROA, and for the measurement variable of firm value using Tobin's Q ratio. The sample used in this research is 102 firms listed on the IDX, from the manufacturing industry. The data from this research were obtained from the company's annual financial statements for the period of 2023. The analyze method in this research using multiple linear regression model to examining the data variables. The results of this research find that liquidity management is negative, but not correlation and not effect to operational performance, while on firm value it is negative and has a weak correlation and may be effected by liquidity management. The result of examines the effect of liquidity management to operational performance in this research not match the expected result, which is due to the small average of the ROA ratio, this shows that the firm sampled in this research are able to manage their liquidity well, indicated by ability to shorten the Cash Conversion Cycle time, but not equal with the firm’s ability to maximize the utilization of its own assets to earn profits.
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