The Effect of Receivables and Inventory Turnover on Net Profit Margin in Consumer Goods Companies Listed on the IDX

Oct 13, 2025 by magicalceylontours.com 26 views

The Effect of Receivables and Inventory Turnover on Net Profit Margin in Consumer Goods Companies Listed on the IDX

Introduction

The Indonesia Stock Exchange (IDX) is one of the largest stock exchanges in Southeast Asia, with a wide range of companies listed across various sectors. Consumer goods companies are a significant segment of the IDX, with many well-known brands listed on the exchange. However, the profitability of these companies can be influenced by various factors, including receivables and inventory turnover. This study aims to investigate the effect of receivables and inventory turnover on the net profit margin of consumer goods companies listed on the IDX.

Background

Receivables and inventory turnover are important metrics used to assess a company's operational efficiency. Receivable turnover shows how fast a company can collect trade receivables, while inventory turnover shows how fast a company can sell inventory. A high receivable turnover ratio indicates that a company is able to collect its receivables quickly, which can lead to an increase in cash flow and profitability. Similarly, a high inventory turnover ratio indicates that a company is able to sell its inventory quickly, which can also lead to an increase in profitability.

Methodology

This study used a replication of previous research using time collapse data. The population of this study included 39 consumer goods companies listed on the IDX during the 2010-2012 period, and the entire company was sampled. The purposive sampling method was used to select samples. The data used was secondary data obtained from the official IDX website (www.idx.co.id). The dependent variable in this study was the net profit margin, while the independent variable was the turnover of receivables and inventory turnover. The data collected was processed with a classic assumption test before the hypothesis test was carried out. SPSS software was used to analyze the data.

Results

The results of the analysis showed that the turnover of receivables and inventory turnover jointly had no significant effect on the net profit margin. Likewise, partially, the turnover of receivables and inventory turnover also did not have a significant effect on the net profit margin. This finding is interesting because it is contrary to the theory of financial management, which states that the turnover of receivables and high inventory turnover can increase profitability.

The Importance of Receivables and Inventory Turnover

Receivable turnover and inventory turnover are important metrics used to assess a company's operational efficiency. Receivable turnover shows how fast a company can collect trade receivables, while inventory turnover shows how fast a company can sell inventory. A high receivable turnover ratio indicates that a company is able to collect its receivables quickly, which can lead to an increase in cash flow and profitability. Similarly, a high inventory turnover ratio indicates that a company is able to sell its inventory quickly, which can also lead to an increase in profitability.

Deeper Analysis

The results of this study indicate that other factors may play a role in determining the profitability of consumer goods on the IDX. This shows the need for deeper analysis to identify other factors that contribute to the company's profit margin. Here are some factors to consider:

*** Production Costs: ** Companies with low production costs tend to have a higher net profit margin. *** Competition: ** Right competition in the consumer goods market can cause companies to reduce selling prices to attract consumers, thereby reducing net profit margin. *** Marketing Strategy: ** Effective marketing strategies can help companies increase sales and net profit margin. *** Product Quality: ** High quality products tend to have a higher profit margin.

Conclusions and Recommendations

This study shows that receivables and inventory turnover have no significant effect on the net profit margin of consumer goods companies on the IDX. This indicates that other factors may play a more role in determining company profitability. It is essential for companies to continue to monitor and improve operational efficiency, as well as conduct comprehensive analysis to identify other factors that can increase profitability.

Recommendations for Further Research

Conduct research using longer data periods.
Analyzing other factors that contribute to the net profit margin of consumer goods companies.
Conduct research using a larger company sample.

Conclusion

This study made an important contribution to understanding the effect of receivables and inventory turnover on the profitability of consumer goods companies on the IDX. By understanding the factors that influence profitability, companies can take the right steps to improve their financial performance. The findings of this study have implications for companies, investors, and policymakers, and highlight the need for further research in this area.

Limitations of the Study

This study has several limitations. Firstly, the study used a replication of previous research using time collapse data, which may not be representative of the current market situation. Secondly, the study only analyzed the effect of receivables and inventory turnover on the net profit margin, and did not consider other factors that may influence profitability. Finally, the study only used a sample of 39 consumer goods companies listed on the IDX, which may not be representative of the entire market.

Future Research Directions

This study highlights the need for further research in this area. Some potential future research directions include:

Conducting research using longer data periods to analyze the effect of receivables and inventory turnover on the net profit margin over a longer period.
Analyzing other factors that contribute to the net profit margin of consumer goods companies, such as production costs, competition, marketing strategy, and product quality.
Conducting research using a larger company sample to analyze the effect of receivables and inventory turnover on the net profit margin of a larger number of companies.

Conclusion

In conclusion, this study provides valuable insights into the effect of receivables and inventory turnover on the net profit margin of consumer goods companies listed on the IDX. The findings of this study highlight the need for companies to continue to monitor and improve operational efficiency, as well as conduct comprehensive analysis to identify other factors that can increase profitability. The study also highlights the need for further research in this area, and provides recommendations for future research directions.
Frequently Asked Questions (FAQs) about the Effect of Receivables and Inventory Turnover on Net Profit Margin in Consumer Goods Companies Listed on the IDX

Q: What is the significance of this study?

A: This study aims to investigate the effect of receivables and inventory turnover on the net profit margin of consumer goods companies listed on the IDX. The findings of this study can provide valuable insights for companies, investors, and policymakers to understand the factors that influence profitability.

Q: What are receivables and inventory turnover?

A: Receivables and inventory turnover are important metrics used to assess a company's operational efficiency. Receivable turnover shows how fast a company can collect trade receivables, while inventory turnover shows how fast a company can sell inventory.

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

A: The findings of this study suggest that companies should not solely rely on receivables and inventory turnover to improve profitability. Instead, companies should focus on other factors such as production costs, competition, marketing strategy, and product quality to increase profitability.

Q: What are the limitations of this study?

A: This study has several limitations. Firstly, the study used a replication of previous research using time collapse data, which may not be representative of the current market situation. Secondly, the study only analyzed the effect of receivables and inventory turnover on the net profit margin, and did not consider other factors that may influence profitability. Finally, the study only used a sample of 39 consumer goods companies listed on the IDX, which may not be representative of the entire market.

Q: What are the recommendations for further research?

A: The study recommends conducting research using longer data periods to analyze the effect of receivables and inventory turnover on the net profit margin over a longer period. Additionally, the study suggests analyzing other factors that contribute to the net profit margin of consumer goods companies, such as production costs, competition, marketing strategy, and product quality. Finally, the study recommends conducting research using a larger company sample to analyze the effect of receivables and inventory turnover on the net profit margin of a larger number of companies.

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

A: The findings of this study suggest that investors should not solely rely on receivables and inventory turnover to evaluate a company's profitability. Instead, investors should consider other factors such as production costs, competition, marketing strategy, and product quality to make informed investment decisions.

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

A: The findings of this study suggest that policymakers should consider the factors that influence profitability when developing policies to support the growth of consumer goods companies. This may include policies to reduce production costs, improve competition, and enhance marketing strategies.

Q: What are the future research directions?

A: The study highlights the need for further research in this area. Some potential future research directions include:

Conducting research using longer data periods to analyze the effect of receivables and inventory turnover on the net profit margin over a longer period.
Analyzing other factors that contribute to the net profit margin of consumer goods companies, such as production costs, competition, marketing strategy, and product quality.
Conducting research using a larger company sample to analyze the effect of receivables and inventory turnover on the net profit margin of a larger number of companies.

Q: What are the practical implications of this study?

A: The findings of this study have practical implications for companies, investors, and policymakers. Companies should focus on improving operational efficiency, reducing production costs, and enhancing marketing strategies to increase profitability. Investors should consider other factors such as production costs, competition, marketing strategy, and product quality to make informed investment decisions. Policymakers should consider the factors that influence profitability when developing policies to support the growth of consumer goods companies.