Current Ratio and Profitability

Oct 13, 2025 by recoveryshake.com 85 views

Introduction

The cooperative sector plays a vital role in the economy of the Republic of Indonesia, providing essential services and products to its members. However, the financial performance of cooperatives can be affected by various factors, including debt to equity ratio, current ratio, receivables, and corporate size. This study aims to analyze the effect of these factors on profitability measured through return on assets (ROA) in employee cooperatives (KPRI) registered in PKP-RI Medan City during the period 2011 to 2015.

Methodology

This study employed a quantitative approach, using secondary data obtained from the accountability reports of 121 KPRIs registered in PKP-RI Medan City. The data was analyzed using statistical analysis with the help of SPSS software. The purposive sampling method was used to select 38 KPRIs as a sample for this study.

Debt to Equity Ratio (DER) and Profitability

The debt to equity ratio (DER) is a financial ratio that measures the proportion of debt to equity in a company's capital structure. A high DER indicates that a company is heavily reliant on debt, which can increase the risk of financial distress. The results of this study showed that the DER had a negative and significant effect on profitability (ROA). This indicates that the higher the debt ratio compared to equity, the decreasing profitability that can be achieved.

Current Ratio and Profitability

The current ratio is a liquidity ratio that measures a company's ability to pay its short-term debts. A high current ratio indicates that a company has sufficient liquid assets to meet its short-term obligations. The results of this study showed that the current ratio had a positive and significant influence on profitability, which means that the management of current assets will support the achievement of higher profitability.

Receivable Turnover and Profitability

Receivable turnover is a measure of how quickly a company can collect its accounts receivable. A high receivable turnover indicates that a company can collect its receivables efficiently, which can improve its cash flow and profitability. The results of this study showed that receivable turnover had a positive and significant influence on profitability, which means that good receivables management will support the achievement of higher profitability.

Corporate Size and Profitability

Corporate size is a measure of a company's size and scale of operations. The results of this study showed that corporate size did not have a significant effect on profitability. This suggests that the size of a company is not a determining factor in its profitability.

Simultaneous Testing of Independent Variables

The simultaneous testing of all independent variables showed that the ratio of debt to equity, current ratio, receivable turnover, and overall company size have a significant effect on profitability (ROA). This indicates that companies capable of managing debt, liquidity, and gathering receivables well can increase their profitability.

Conclusion

This study provides an in-depth understanding of the effect of debt to equity ratio, current ratio, receivable turnover, and corporate size on profitability in employee cooperatives (KPRI) registered in PKP-RI Medan City during the period 2011 to 2015. The results of this study have several implications for cooperative management. First, cooperatives are expected to manage debt wiser, avoid excessive dependence on debt that can reduce profitability. Second, it is important to pay attention to the current ratio and turnover of receivables by making efforts to monitor cash flows and more efficient receivables. Finally, cooperatives should not only focus on size, but rather operational efficiency that can improve financial performance.

Recommendations

Based on the findings of this study, several recommendations can be submitted to cooperative management. First, cooperatives should manage debt wiser, avoid excessive dependence on debt that can reduce profitability. Second, it is essential to pay attention to the current ratio and turnover of receivables by making efforts to monitor cash flows and more efficient receivables. Finally, cooperatives should not only focus on size, but rather operational efficiency that can improve financial performance.

Limitations of the Study

This study has several limitations. First, the study only analyzed the effect of debt to equity ratio, current ratio, receivable turnover, and corporate size on profitability in employee cooperatives (KPRI) registered in PKP-RI Medan City during the period 2011 to 2015. Second, the study only used secondary data obtained from the accountability reports of 121 KPRIs registered in PKP-RI Medan City. Third, the study only analyzed the effect of these factors on profitability measured through return on assets (ROA).

Future Research Directions

This study provides several directions for future research. First, future studies can analyze the effect of other factors on profitability in employee cooperatives (KPRI) registered in PKP-RI Medan City. Second, future studies can use primary data collected from the cooperatives themselves. Third, future studies can analyze the effect of these factors on other financial performance measures, such as return on equity (ROE) and return on investment (ROI).

Conclusion

Q: What is the purpose of this study?

A: The purpose of this study is to analyze the effect of debt to equity ratio, current ratio, receivables, and corporate size on profitability measured through return on assets (ROA) in employee cooperatives (KPRI) registered in PKP-RI Medan City during the period 2011 to 2015.

Q: What are the independent variables in this study?

A: The independent variables in this study are debt to equity ratio (DER), current ratio, receivable turnover, and corporate size.

Q: What are the dependent variables in this study?

A: The dependent variable in this study is profitability measured through return on assets (ROA).

Q: What is the population of this study?

A: The population of this study consists of 121 KPRIs registered in PKP-RI Medan City.

Q: What is the sample size of this study?

A: The sample size of this study is 38 KPRIs selected through the purposive sampling method.

Q: What is the data source of this study?

A: The data source of this study is the accountability reports of 121 KPRIs registered in PKP-RI Medan City.

Q: What is the analysis method used in this study?

A: The analysis method used in this study is statistical analysis with the help of SPSS software.

Q: What are the findings of this study?

A: The findings of this study show that debt to equity ratio (DER) has a negative and significant effect on profitability (ROA), while current ratio and receivable turnover have a positive and significant influence on profitability. Corporate size does not have a significant effect on profitability.

Q: What are the implications of this study?

A: The implications of this study are that cooperatives should manage debt wiser, avoid excessive dependence on debt that can reduce profitability, pay attention to the current ratio and turnover of receivables by making efforts to monitor cash flows and more efficient receivables, and focus on operational efficiency that can improve financial performance.

Q: What are the limitations of this study?

A: The limitations of this study are that it only analyzed the effect of debt to equity ratio, current ratio, receivable turnover, and corporate size on profitability in employee cooperatives (KPRI) registered in PKP-RI Medan City during the period 2011 to 2015, it only used secondary data obtained from the accountability reports of 121 KPRIs registered in PKP-RI Medan City, and it only analyzed the effect of these factors on profitability measured through return on assets (ROA).

Q: What are the future research directions of this study?

A: The future research directions of this study are to analyze the effect of other factors on profitability in employee cooperatives (KPRI) registered in PKP-RI Medan City, use primary data collected from the cooperatives themselves, and analyze the effect of these factors on other financial performance measures, such as return on equity (ROE) and return on investment (ROI).

Q: What are the contributions of this study?

A: The contributions of this study are that it provides an in-depth understanding of the effect of debt to equity ratio, current ratio, receivable turnover, and corporate size on profitability in employee cooperatives (KPRI) registered in PKP-RI Medan City during the period 2011 to 2015, and it provides several implications for cooperative management and future research directions.