REACHING PERSISTENCE OF FINANCIAL PERFORMANCE BY IMPLEMENTING WORKING CAPITAL MANAGEMENT

Abstract

Main Purpose: This study aims to examine the effects of working capital management (WCM) on the persistence of financial performance.

Method: This study was companies listed on the Indonesia Stock Exchange used were 91 companies running retail, industrial and basic material businesses during the 2010-2020 period. The hierarchical linear mixed (HLM) estimation method is used to process multilevel data analysis.

Main Finding: Main funding show that regardless of the corporate life cycle stage, NTC has a significant positive coefficient with persistent financial performance as measured by profit persistence. The increase in NTC will increase the performance although the company cannot maintain the same performance across all stages of the life cycle. During the introduction stage, the increase has a positive impact on the performance, but it has a negative impact during the growth stage. In the mature, it has a positive impact and decreases again at the decline stage.

Implikasi :

This study provides a simplification related to working capital management problems at the company's life cycle stage and its impact on the company's financial performance in dealing with various business and economic turmoil in the long term.

Kebaruan Penelitian:

This research broadens insights regarding the application of working capital management at the stages of the company's life cycle and its impact on persistent financial performance.

Keywords: Persistence of financial performance; Working Capital Management; Corporate life cycle