THE INFLUENCE OF CAPITAL STRUCTURE AND WORKING CAPITAL TURNOVER ON PROFITABILITY
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Date
2013-02-15
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2013 SIBR Conference (Kuala Lumpur) on Interdisciplinary Business and Economics Research, Society of Interdisciplinary Business Research - Universitas Kualalumpur Business School
Abstract
Telecommunication industry in Indonesia has been growing rapidly since 15 years ago. PT. Telkom Tbk (TLKM) for years has become the leader of the market. Now the situation has changed as many competitors came to compete with the market leader starting from PT. Indosat Tbk (ISAT) and PT. XL Axiata Tbl (EXCL) as the main competitors until PT. Bakrie Telecom (BTEL), PT. Smartfren Telecom Tbk (FREN), and PT. Inovisi Infracom (INVS). The competition among companies in telecommunication industry has made the profitability among them under question. From 2007 until 2011, profitability in telecommunication industry had decreased significantly.
The objective of this research is to investigate the effect of capital structure and working capital turnover on profitability in telecommunication industry from 2007 until 2011. This research used four regression model: 1st model is to investigate the effect of capital structure factors on capital structure ; 2nd
Population of this research is telecomunication companies listed in Indonesia Stock Exchange. The sampling method used in this research is purposive sampling and there are 5 companies which are suitable according to the criteria of the sample and two stage least squares (2 SLS) as the analysis method is to investigate the effect of capital structure and working capital turnover on profitability.
The result of the 1st Model, all independent variables have no significant effect on dependant variable either silmutaneously or partially ; 2nd
model, silmutaneously there is no effect on proftability but working capital turnover affect profitability partially.
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Keywords
Capital Structure, Working Capital Turnover, Profitability