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Oct 13, 2025 by magicalceylontours.com 111 views

Effect of Inventory Turnover, Current Ratio, and Total Asset Turnover on Economic Profitability in Real Estate and Property Manufacturing Companies Listed on the Indonesia Stock Exchange in 2010-2012

Introduction

The real estate and property manufacturing sector is a significant contributor to the Indonesian economy, with numerous companies listed on the Indonesia Stock Exchange (IDX). However, the sector's performance is often influenced by various factors, including inventory turnover, current ratio, and total asset turnover. This study aims to investigate the effect of these independent variables on economic profitability (return on equity/ROE) in real estate and property manufacturing companies listed on the IDX during the 2010-2012 period.

Research Methodology

This study employed a causal research design, using secondary data obtained from the financial statements of manufacturing companies listed on the IDX. The data were analyzed using quantitative methods, specifically multiple linear regression analysis, to examine the relationship between the independent variables (inventory turnover, current ratio, and total asset turnover) and the dependent variable (ROE).

Independent Variables

Inventory Turnover (IT): Measuring how fast a company can sell and replace its inventory of goods, inventory turnover is an essential indicator of a company's efficiency in inventory management. A high inventory turnover is expected to have a positive impact on profitability.
Current Ratio (CR): Reflecting a company's liquidity, the current ratio is a critical indicator of its ability to meet short-term obligations. A high current ratio is expected to contribute to increased profitability.
Total Asset Turnover (TATO): Measuring a company's efficiency in using its assets to generate income, total asset turnover is an essential indicator of a company's ability to generate income from its assets.

Results

The results of this study showed that the independent variables (inventory turnover, current ratio, and total asset turnover) did not have a significant influence on economic profitability (ROE) in real estate and property manufacturing companies listed on the IDX during the 2010-2012 period. This finding raises questions about other factors that might affect economic profitability in this sector.

In-Depth Analysis

Inventory Turnover: The results showed that inventory turnover was not directly correlated with ROE, despite its expected positive impact on profitability. This suggests that inventory management efficiency may not be the primary driver of profitability in this sector.
Current Ratio: Although the current ratio is an essential indicator of a company's liquidity, the results showed that liquidity conditions were not always the main indicator in increasing profitability. This suggests that other factors, such as macroeconomic conditions and government policies, may play a more significant role in determining a company's financial performance.
Total Asset Turnover: The results showed that total asset turnover did not contribute significantly to ROE, despite its expected positive impact on profitability. This suggests that the efficiency of using assets to generate income may not be the primary driver of profitability in this sector.

Research Conclusion and Relevance

The findings of this study indicate the need for a more in-depth study of other factors that can affect ROE in the real estate and property sector. For example, external factors such as macroeconomic conditions, government policies, and innovations in the industry can play an important role in determining a company's financial performance.

This study provides valuable insights for investors and decision makers in the company, showing that the management of fundamental aspects such as inventory, liquidity, and asset efficiency must be balanced with more holistic strategies and analysis to improve the company's financial performance. By understanding that not all fundamental factors have a direct influence on profitability, companies can be wiser in formulating business strategies oriented to growth and sustainability.

Implications for Practice

The findings of this study have several implications for practice:

Inventory Management: Companies should focus on improving their inventory management efficiency to increase profitability.
Liquidity Management: Companies should maintain a healthy current ratio to ensure they can meet short-term obligations.
Asset Utilization: Companies should focus on improving their asset utilization efficiency to increase profitability.
Holistic Strategies: Companies should adopt more holistic strategies and analysis to improve their financial performance.

Limitations of the Study

This study has several limitations:

Data Limitation: The study used secondary data obtained from the financial statements of manufacturing companies listed on the IDX, which may not be comprehensive or up-to-date.
Methodological Limitation: The study employed a causal research design, which may not capture the complexity of the relationships between the independent variables and the dependent variable.
Generalizability: The study's findings may not be generalizable to other sectors or companies.

Future Research Directions

Future research should focus on investigating other factors that can affect ROE in the real estate and property sector, such as:

Macroeconomic Conditions: The impact of macroeconomic conditions on ROE in the real estate and property sector.
Government Policies: The impact of government policies on ROE in the real estate and property sector.
Innovations in the Industry: The impact of innovations in the industry on ROE in the real estate and property sector.

By understanding the complex relationships between the independent variables and the dependent variable, companies can develop more effective strategies to improve their financial performance and achieve sustainability.
Q&A: Effect of Inventory Turnover, Current Ratio, and Total Asset Turnover on Economic Profitability in Real Estate and Property Manufacturing Companies Listed on the Indonesia Stock Exchange in 2010-2012

Q: What is the main objective of this study?

A: The main objective of this study is to investigate the effect of inventory turnover, current ratio, and total asset turnover on economic profitability (return on equity/ROE) in real estate and property manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the 2010-2012 period.

Q: What are the independent variables studied in this research?

A: The independent variables studied in this research are:

Inventory Turnover (IT): Measuring how fast a company can sell and replace its inventory of goods.
Current Ratio (CR): Reflecting a company's liquidity, the current ratio is a critical indicator of its ability to meet short-term obligations.
Total Asset Turnover (TATO): Measuring a company's efficiency in using its assets to generate income.

Q: What are the results of this study?

A: The results of this study showed that the independent variables (inventory turnover, current ratio, and total asset turnover) did not have a significant influence on economic profitability (ROE) in real estate and property manufacturing companies listed on the IDX during the 2010-2012 period.

Q: What are the implications of this study for practice?

A: The findings of this study have several implications for practice:

Inventory Management: Companies should focus on improving their inventory management efficiency to increase profitability.
Liquidity Management: Companies should maintain a healthy current ratio to ensure they can meet short-term obligations.
Asset Utilization: Companies should focus on improving their asset utilization efficiency to increase profitability.
Holistic Strategies: Companies should adopt more holistic strategies and analysis to improve their financial performance.

Q: What are the limitations of this study?

A: This study has several limitations:

Data Limitation: The study used secondary data obtained from the financial statements of manufacturing companies listed on the IDX, which may not be comprehensive or up-to-date.
Methodological Limitation: The study employed a causal research design, which may not capture the complexity of the relationships between the independent variables and the dependent variable.
Generalizability: The study's findings may not be generalizable to other sectors or companies.

Q: What are the future research directions?

A: Future research should focus on investigating other factors that can affect ROE in the real estate and property sector, such as:

Macroeconomic Conditions: The impact of macroeconomic conditions on ROE in the real estate and property sector.
Government Policies: The impact of government policies on ROE in the real estate and property sector.
Innovations in the Industry: The impact of innovations in the industry on ROE in the real estate and property sector.

Q: What are the implications of this study for investors and decision makers?

A: The findings of this study provide valuable insights for investors and decision makers in the company, showing that the management of fundamental aspects such as inventory, liquidity, and asset efficiency must be balanced with more holistic strategies and analysis to improve the company's financial performance. By understanding that not all fundamental factors have a direct influence on profitability, companies can be wiser in formulating business strategies oriented to growth and sustainability.

Q: What are the recommendations for future research?

A: Future research should focus on investigating the complex relationships between the independent variables and the dependent variable, and should consider the following recommendations:

Use of primary data: Future research should use primary data to ensure that the data is comprehensive and up-to-date.
Use of more advanced statistical techniques: Future research should use more advanced statistical techniques, such as structural equation modeling, to capture the complexity of the relationships between the independent variables and the dependent variable.
Consideration of other factors: Future research should consider other factors that can affect ROE in the real estate and property sector, such as macroeconomic conditions, government policies, and innovations in the industry.