WORKING CAPITAL MANAGEMENT STRATEGY TO IMPROVE CASH CONVERSION CYCLE: CASE STUDY OF PT ABC

• Main Author: Maesaroh, Maya
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/81276
• Institution: Institut Teknologi Bandung

Infrastructure is an important issue for economic growth in Indonesia. There are 13 types of infrastructure prioritized by presidential regulation and one of them is toll road infrastructure. It turns out that state-owned companies dominate toll road projects in Indonesia, and PT ABC is a supplier to these toll road projects and is engaged in construction. With the current case of default on maturing debt to SOE customers, it impacts the liquidity of the company. So this research is conducted with the aim of knowing the effect of customer default on Cash Conversion Cycle (CCC) and Net Working Capital (NWC) in the research period 2019 to Q3 2023. Then after analyzing each variable, the next step is to analyze the relationship between Cash Conversion Cycle (CCC) and Net Working Capital (NWC) using the Spearman's rho Correlation Test. The results of the analysis show that SOE customer defaults affect the condition of the Cash Conversion Cycle (CCC) and its components such as Inventory Conversion Period (ICP), ACP (Average Collection Period) and PDP (Payable Deferral Period), especially in 2023, where the Cash Conversion Cycle (CCC) value is quite long (not good), but it is not the worst Cash Conversion Cycle (CCC) during the observation period. Then, the effect of SOE customer default on Net Working Capital (NWC) is that only two periods the company experienced negative NWC, but not in 2023 because in 2023, the Net Working Capital (NWC) results are positive, or it can be interpreted that the company's current assets are considered capable of meeting the company's current liabilities (liquid). In addition, the Spearman's rho Correlation Test shows that the relationship between Cash Conversion Cycle (CCC) and Net Working Capital (NWC) is negatively correlated but insignificant. Based on the findings in this study, the solution that can be provided is that the company can focus on retail sales to reduce customer defaults and improve the company's liquidity.