The Effect of Capital Structure and Working Capital on Profitability (Case Study at PT. Indosat Tbk in The Period of 2005-2014)
Ratu Dintha IZFS; Dr. H. Ahim Surachim, M.Pd., M.Si
Indonesian University of Education
One of the main issues in financial research is why firms are different or put in another way, why they obtain different profitability levels. Profitability is an important meaning in the process of maintaining existence of a company in a long term manner, due to its ability to show company’s future prospect. The average level of profitability recorded negative on telecommunication sector, especially at PT Indosat Tbk. There are many factors that affect the profitability of some of them is the use of capital structure with the measure debt to equity ratio (DER) and working capital with the measure is working capital turnover (WCT).
This research was intended to know the effect of capital structure and working capital on the profitability of PT. Indosat Tbk in the period of 2005-2014. This research applied descriptive and verification method concluded in time series design. The statistic analysis that was used in this study was multiple linear regression at 5% significance level. Based on the findings, it was provable that regression statistic model could applied in noticing the effect of capital structure and working capital on profitability through F-test. Moreover, T-test showed that capital structure negatively affected the profitability in significant manner. Lastly, working capital was identified to be a factor that did not affect the profitability.
Topic: Financial Management and Accounting