The Cash Flow Advantage: Examining Cash Turnover's Moderating Effect on the Profitability Impact of Receivables and Inventory Turnover
Keywords:
Receivables turnover, Inventory turnover, Profitability, Cash turnover, Pharmaceutical firms, Panel data regression.
Abstract
Efficient working capital management is essential for improving firm profitability, particularly in capital-intensive industries such as pharmaceuticals. This study aims to examine the effects of receivables turnover and inventory turnover on profitability, with cash turnover positioned as a moderating variable. The analysis is conducted on panel data from pharmaceutical companies listed on the Indonesia Stock Exchange during the 2020–2024 period. Panel least squares regression is applied to evaluate both direct and moderating relationships among the variables. The findings show that receivables turnover does not have a significant effect on profitability, whereas inventory turnover has a positive and significant influence. Cash turnover exhibits a limited moderating role in the relationship between both receivables turnover and inventory turnover with profitability. These results indicate that operational efficiency in inventory management plays a more critical role in enhancing profitability than liquidity rotation alone. The study highlights the complexity of financial decision-making in the pharmaceutical sector and provides empirical insights for managers in optimizing working capital strategies.
References
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Sunaryo, D., & Lestari, E. P. (2023). Effect of Cash, Receivables, and Inventory Turnover on Net Profit Margin (NPM) in Food & Beverage Subsector Manufacturing Companies. Studies in Business Economic.
Akinleye, G. T., & Adesina, O. D. (2024). Inventory Management and Financial Performance of Listed Manufacturing Firms in Nigeria. Journal of Applied And Theoretical Social Sciences, 6(4).
Amalia, R., Agustina, A., Prathamy, Z., & Hermawan, I. (2023). The Effect of Receivable Turnover and Inventories Towards Liquidity of Cigarette Industries. West Science Accounting and Finance, 1(1).
Anggarini, D. R., Safitri, D. R., & Nani, D. A. (2022). The Effect of Cash Turnover and Receivables Turnover on Return on Assets (ROA) in Manufacturing Companies in The Healthcare Sector of The Pharmaceutical Industry Listed on The IDX in 2016-2020. Jurnal Ekonomi & Bisnis JAGADITHA, 9(1).
Chuang, H. H., Oliva, R., & Heim, G. R. (2019). Examining the Link between Retailer Inventory Leanness and Operational Efficiency: Moderating Roles of Firm Size and Demand Uncertainty. Production and Operations Management, 28(9), 2338–2364. https://doi.org/10.1111/poms.13055
Dasman, S., Purnomo, G. G., & Wulandari, D. S. (2023). Macroeconomic Conditions, World Capital Market, and Commodity Price on The Jakarta Composite Index. Proceeding International Pelita Bangsa, 1(1), 155–162.
Ekakitie, S. E., Kifordu, A. A., & Nwaebuni, C. (2022). Optimizing profit maximization through effective inventory control practice of manufacturing firms in Nigeria. Journal of Global Social Sciences, 3(11), 89–114.
Ertia Nursanti Eryatna, Nurafni Eltivia, & Kuni Utami Handayawati. (2021). The Effect of Cash Turnover, Receivable Turnover, and Inventory Turnover Towards Profitability of Consumer Goods Companies in Indonesia. Proceedings of 2nd Annual Management, Business and Economic Conference (AMBEC 2020), 191–197. https://doi.org/10.2991/aebmr.k.210717.039
Gołaś, Z. (2020). The effect of inventory management on profitability: Evidence from the Polish food industry: Case study. Agricultural Economics, 66(5), 234–242.
Hussain, S., Hassan, A. A. G., Quddus, A., Rafiq, M., & Nguyen, V. C. (2021). Cash conversion cycle sensitivity by moderating role of exchange rates volatility on firm’s financial performance. Business Theory & Practice.
Ijuwo, A. (2024). EFFECT OF WORKING CAPITAL MANAGEMENT ON PROFITABILITY OF LISTED CONSUMER GOOD COMPANIES IN NIGERIA. Journal of Advance Research in Business ,Management and Accoun, 10(02).
Jia, F., Xu, Y., Chen, L., & Fernandes, K. (2025). Does supply chain concentration improve sustainability performance: The role of operational slack and information transparency. International Journal of Operations & Production Management, 45(1), 269–300. https://doi.org/10.1108/IJOPM-12-2022-0807
Kimani, J., & Kibera, M. (2023). Evolution of Risks Facing Commercial Banks in Kenya and Associated Strategic Responses. International Journal of Modern Risk Management, 1(2).
Laghari, F., Ahmed, F., & Garcia, M. de las N. (2023). Cash flow management and its effect on firm performance: Empirical evidence on non-financial firms of China. Tenth International Congress on Peer Review and Scientific Publication. https://doi.org/10.1371/journal.pone.0287135
Olusegun, A. A., Olayinka, W. A., & Comfort, D. T. (2024). Investigating Inventory Management and Profitability of Listed Consumer Goods Companies in Nigeria. Journal of Accounting and Financial Management, 10(1).
Panigrahi, R. R., Shrivastava, A. K., & Kapur, P. K. (2024). Impact of inventory management practices on the operational performances of SMEs: Review and future research directions. International Journal of System Assurance Engineering and Management, 15(5), 1934–1955. https://doi.org/10.1007/s13198-023-02216-4
Shadaei, M., & Xu, J. (2023). Enterprise Risk Management and Firm Operations: Evidence from Inventory Management. SSRN. https://dx.doi.org/10.2139/ssrn.4429714
Siekelova, A., Kliestik, T., Svabova, L., Androniceanu, A., & Schönfeld, J. (2017). RECEIVABLES MANAGEMENT: THE IMPORTANCE OF FINANCIAL INDICATORS IN ASSESSING THE CREDITWORTHINESS. Polish Journal of Management Studies, 15(2), 217–228. https://doi.org/10.17512/pjms.2017.15.2.20
Sunaryo, D., & Lestari, E. P. (2023). Effect of Cash, Receivables, and Inventory Turnover on Net Profit Margin (NPM) in Food & Beverage Subsector Manufacturing Companies. Studies in Business Economic.
Published
2026-02-03
How to Cite
Fuadi, A., Wulandari, T., & Larasati, D. (2026). The Cash Flow Advantage: Examining Cash Turnover’s Moderating Effect on the Profitability Impact of Receivables and Inventory Turnover . Jurnal Akuntansi Bisnis Pelita Bangsa, 10(02), 200-213. https://doi.org/10.37366/akubis.v10i2.3115
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Articles
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