The Effect of Working Capital on the Profitability of Pharmaceutical Companies Listed in the Indonesia Sharia Stock Index (ISSI)

Abstract

The purpose of this paper is to examine the factors affecting profitability of pharmaceutical company in
Indonesia. This research is based on three independent variables that were empirically examined for working capital
relationship with profitability. These variables are Cash Turn Over, Receivable Turn Over, Inventory Turn Over. Data of
five pharmaceutical companies listed on in the Indonesia Sharia Stock Index covering the period of 2018–2023 were
extracted from companies’ annual reports. The findings of this research show that cash turnover, accounts receivable
turnover and inventory turnover simultaneously influence profitability. Partially, cah turnover does not have a significant
effect on profitability. Meanwhile, receivables turnover and inventory turnover have a significant effect on profitability,
with a coefficient of determination (R2) of 72,8%. The results provide a basis for future research in this field and can
inform decision-making for pharmaceutical firms looking to improve their financial performance.pharmaceutical firms
looking to improve their financial performance.