ANALYSIS OF THE NET WORKING CAPITAL AND WORKING CAPITAL TURNOVER IN INCREASE PROFITABILITY ON PT PERKEBUNAN NUSANTARA III (PERSERO) MEDAN

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1 ANALYSIS OF THE NET WORKING CAPITAL AND WORKING CAPITAL TURNOVER IN INCREASE PROFITABILITY ON PT PERKEBUNAN NUSANTARA III (PERSERO) MEDAN Muslih 1 muslihekonomi@gmail.com Muhammad Firza Alpi 2 1,2 University of Muhammadiyah Sumatera Utara Abstract The purpose of this research is to analyze how the net working capital and Working Capital Turnover in increase profitability on PT Perkebunan Nusantara III (Persero) Medan. Data analysis techniques used in this research are a descriptive approach. The results of the study showen that the company has not been optimally managing net working capital and Working Capital Turnover in increase profitability, seen that the working capital of the company in the year 2012 has increased, but net profit margin, gross profit margins and return on assets to decline. In 2013 circulation of the working capital of the company has increased, but net profit margin, gross profit margins and return on assets to decline. The drop occurred in the Net Working Capital the company this happens because there are a greater current liabilities compared with the current assets and a decline in circulation of the company working capital occurs as sales decline is larger compared with the decline in working capital. Keywords: Net Working Capital, Working Capital Turnover, Profitability INTRODUCTION The development of technology increasingly increased along with the increasing number of a number of companies so that the competition between companies increasingly tight. Each company in the operations running always directed at the achievement of the goals that have been assigned. For the company, the main objective of the company is to gain the maximum continued with business development in order to reflect the success and maintain the survival of the company. The Working Capital problem is the problem that there is no end, during the company still operates, capital is needed to make the financing of the activities of the company. The existence of sufficient working capital allows a 68 ISBN

2 company to carry out their activity is not having difficulties and obstacles that may arise. The existence of excessive working capital shows the existence of the funds that are not productive and this provides a loss because the available funds not used for the activities of the company. On the contrary, lack of working capital is the main reason of the failure of the company in running its subsidiaries. The effectiveness of the use of working capital can be measured by the ratio of the working capital turnover. Working Capital Turnover Ratio shows how many times the funds that are embedded in the rotating working capital in a period, or the number of sales that can be achieved by each of the rupiahs in working capital and the number of the sales automatically affect profitability. The faster cycle working capital shows the more effective use of working capital, which impacts on increasing the profitability of the company (Munawir 2014:240). To measure the success of the company in an effort to realize the operations of the company is effective and efficient in producing the profit obtained, seen not only from the big and the small number of spiders obtained but can be seen from the profitability. The problem of profitability it is important for the survival and development of the company. For the direction of the company, profitability can be used as a measure to know the success or failure of the company has progressed, while for investors can be used as a measure of the embedded capital prospects in the company. Profitability of the Company obtained from how companies utilize working capital or called with the working capital turnover. Remember the importance of working capital in the company, financial management must be able to plan with both the enormity of the right working capital and in accordance with the needs of the company, because if an excess or lack of funding this will affect the level of profitability of the company. The company also must be able to choose the sources of funds is good and can allocate funds efficiently. Sources of funds can be obtained through companies own capital, profit obtained, the short-term debt and long-term debt (Yoyon and Fani, 2011). According to Jumingan (2005) "bigger working capital owned by a company indicates the better nor the condition of the company because it indicates that the company has a power source that is current assets to be able to finance operating activities daily company". This can be explained that the working capital and the spider is the unity of the elements that are required in the achievement of the purpose of the company. To obtain a number of specific funds, does not remove from the working capital that is needed. Profitability ratio is the ratio of which aims to know the ability of the company to produce the spider for a certain period and also provides an overview of the level ISBN

3 of effectiveness of management in carrying out the activities of operations. The effectiveness here seen from the spider produced against sales and investment company. The policy taken the company in determining the spider can be seen from the level of profitability. Now the profitability ratio used in this research is the Net Profit margins (NPM), Gross Profit margins (GPM) and Return On Assets (ROA). Profitability can be used as a measure to assess the success of a company is using the working capital effectively and efficiently to produce a certain profit level is expected. For the company generally, profitability problem is very important than the spider because a large spider can ensure that the company has been working with efficient. So that should be noted by the company is not only how the attempt to enlarge the spider, but what is more important is how to increase profitability. The ratio of the profitability measures the success of management as indicated by the spider that is produced by the sale and investment. The growth of profitability is marked by changes in profit margins on sales with a high level of profitability means that the company will operate at a low-cost level that will ultimately produce higher high profit. PT. Perkebunan Nusantara III (Persero) Medan is a state-owned enterprise in plantation sector that one of its activities is to manage/producing palm oil and rubber. In this research, researchers examine the net working capital and the working capital turnover company is engaged in a volatile, tend to decline from 2011 until 2015 and cause the profitability to decline. LITERATURE REVIEW Net Working Capital Working Capital is defined as "investment that is embedded within the current assets or short-term assets such as cash equivalents, bank, the bonds, receivables, bicarbonate and other current assets" (cashmere feel 2008:250) Riyanto (2011) stated that: "Working Capital needed by each company to finance the operation of everyday, where the working capital that has been issued is expected to go back into the company in a very short period of time through the proceeds from the sale of the product so that this working capital will continue to spin every few in the company". Working Capital management has an important role in efforts to create a spider. Therefore, a manager is required to not only think about how to obtain the spider, but is also required to supervise, set, also controls the problem of the use of capital. In this case, managers must be able to take the right decisions so that the company can run effectively and efficiently, one of them is the decision-making 70 ISBN

4 about working capital. Working Capital is a key issue and important topics that are often faced by companies, because almost all the attention of the financial manager for processing working capital and current assets that are part of the large enough from the assets. Working Capital needed by each company to finance operations day-to-day, for example to give the money to face the purchase of raw materials, pay the wages of civil servants and others where the fund is expected to be back again into the company in a very short period of time through the proceeds from the sale of product (Aris Setia Noor and Berta Lestari, 2012). The progress of the company will be in line with the needs of the capital needed to finance its activities. Where the larger a company the greater the capital is needed and may not be met by the company itself without any help or interest from the capital. A good working capital management is very important in the field of finance due to errors and confusion in managing working capital can result in business activities be restricted or stopped at once, so that the analysis of the working capital of the company is very important to know the situation in working capital at this time,then it is connected with the financial situation facing the future will come to determine what programs that must be created or what steps should be taken to solve them. Working Capital management is very important for the company because it includes the decision-making about the number and the composition of current assets and how to finance the assets. The company is not able to calculate the level of working capital that satisfies, then the company experienced insolvency and may even be forced into liquidation. Current Assets should be big enough to be able to close the current liabilities in such a way that describes the security level (margin of safety) that satisfies. If the company specifies a more working capital will cause the company to cause over liquid idle funds that will cause the company inefficiency and throw away the opportunity to dispose of the spider. According to Kasmir (2008), the factors that affect the working capital, namely: 1) The type of the company 2) Credit Conditions 3) Production Time 4) The level of Inventorial Turns While according to Munawir (2014) the factors that affect the working capital among others: 1) Type or nature of the company; 2) The amount of time needed to produce or obtain goods that will be sold for the price of the unity of goods; 3) Conditions of purchase materials or merchandise; ISBN

5 4) Sales conditions; and 5) The level of Inventorial Turns. Working capital turnover Always working capital in the state of the rotating or operate in the company during the corresponding company in the state of the business. The period of rotation of the working capital Working Capital Turnover Period ) starts when the cash invested in working capital components when until where cash back again to cash. The more short period means the sooner its revolution or the higher level of its revolution ( Turnover Rate). A long period of Working Capital Turnover depending on a long period of rotation of each of the components of the working capital (Riyanto, 2011). While Aliminsyah and Panji (2003) stated that: "working capital turnover is the efficiency of the use of working capital. Numbers this rotation, compare numbers net sales with a working capital (the difference between current assets subtracted from with debts smoothly), the larger numbers this rotation, more incentives and efficient use of working capital". Sawir (2005): "working capital turnover is a ratio shows how much of the sales (in rupiahs, which can be obtained by the company for each of the rupiah working capital. According to Riyanto (2001), the existence of a low working capital turnover indicates the excess working capital and low levels of Inventorial Turns and trade receivables or high cash balance so that the waste produce funds were not productive and will eventually lead to a loss of the company so that that way profitability decline. Based on the calculation of the working capital turnover can be proposed by the components of the working capital turnover, which consists of 1) current assets 2) debts smoothly and net sales (Munawir, 2014). The two components are explained as follows: 1) Current Assets 2) Debts Smoothly 3) Net sales Profitability Riyanto (2001) stated that the profitability is the ability of the company to produce the spider for a certain period. Nuryadi (2012) define profitability is the ability of the company to obtain the spider related to sales, total assets, and capital. Each company always tries to increase profitability. Kasmir (2008) stated 72 ISBN

6 that the profitability ratio is the ratio of occurrence to assess the ability of the company in the search for profit. This ratio also gives the size of the level of effectiveness of a company management. This is demonstrated by the spider which is produced from the sales and investment income. The point is the use of this ratio shows the efficiency of the company. Raharjaputra (2009) stated that the profitability is a company size to gain/spider that there is a relationship with the sale, total assets, and capital. Profitability is a problem that is very important for the company and profitability are also used as a reference to the success or not a company led by the leaders of the company also for the employees of the company when the profitability of the Company obtained the higher than there are opportunities to increase the salary of the employees. The main tool used to evaluate profitability is sales because with the sale can be known directly profit value that is produced from the sales reduced costs. After that can be known how the return from the sales produced to capitalize issued by the company. When the results of sales can restore or even exceeds the capital that issued it can be said the company has produced a profit. Sartono (2001) holds that the profitability of the company is the ability to obtain the spider in its relationship with the sales of total assets and capital. Thus, for long-term investors will be very interested in this analysis.the profitability of a company will influence policy investors on investment done. The ability of the company to produce the spider will attract investors to invest funds so that the company can expand, instead if the profitability level low will cause the company was considered not to run the business effectively and efficiently so that investors became reluctant to invest funds. Now the assessment of the profitability of the company, according to Brigham and Houston (2006) is as follows: 1) Aspects of the Capital Expenditure 2) Asset quality aspect 3) The aspects of Income 4) This aspect of liquidity METHODS The research approach that is used is a descriptive research is a research done with the main purpose to give a description or description about a situation it objectively, using secondary data. Data analysis techniques used in this research are a descriptive approach. Descriptive namely gather data, clarify data, explains the data and data analyzing. In this study, researchers calculate net working capital and Working Capital Turnover in increase profitability by using the ISBN

7 financial report data in the form of a balance sheet and profit and loss PT Perkebunan Nusantara III (Persero) Medan. FINDINGS In analyzing the financial report of the company, researchers try to analyze the results of the calculation of the net working capital, Working Capital Turnover and the ratio of the profitability of the company. Where the working capital and the working capital turnover and the ratio of profitability will be able to provide or explain the image to a complete range of efficient or not few, if any indigenous companies in using its assets to earn income and profit, as expected, then give description about how working capital and working capital turnover the company can increase the profitability of the company. Net Working Capital Analysis PT Perkebunan Nusantara III (Persero) Medan Table 1. Net Working Capital The Current Assets Current Liabilities Net Working Capital Year ,421,826 2,141, , ,318,056 1,724, , ,126,848TABL 1,787, , ,828,815 19,548,811-5,719, ,347,177 21,110,854-5,763,677 Source: PT Perkebunan Nusantara III (Persero) Medan An Analysis that has been done by the researchers toward the calculation of the financial report of the company is using the concept of net working capital. Based on the table 1 above shows that from 2011 to 2012 Net Working Capital of the company has increased. Because of a decline in current assets such as cash and cash equivalents, third party receivables, trade receivables other third parties is lower compared with the debt reduction smoothly between the other party business debt relate to the third party business debt long term debt maturing in one year as bank debt and Notes payable. But on 2012 to 2013 Net Working Capital declined from 593,957 to 338,901. This happened because of the current assets in 2013 decline in cash and cash equivalents, receivables third parties, inventories, receivables and other third parties and debts smoothly increase on the debt of other third party, money face sales, long-term debt maturing in one year as bank debt, Notes payable and lease financing. In the year 2014 Net Working Capital declined to minus, this because debt increase more smoothly as business debt debt other fees that still must be paid for the money to the customer, tax debt long term 74 ISBN

8 debt maturing within one year and the top of the other short term compared with the increase in current assets such as cash and cash equivalents, restricted cash usage, third party receivables trade receivables other, inventories, tax paid upfront and other current assets. In 2015 Net Working Capital also fell to minus, this because enhancement smoothly greater debt as short-term bank debt debt other third party, tax debt, costs still to be paid and the top of the short-term compared with other assets increase smoothly as its usage restricted Cash, Trade Receivables other third party, tax paid upfront and other current assets. According to the results of the calculation of the data analysis in the financial report of the company and the theory that relates to the trend of declining working capital until the year 2015 is a thing that is not good and can threaten the survival of the company, management can be said less efficient in managing working capital. Based on the theory that is conveyed by Sawir (2005) stated that the working capital is the entire current assets that can be made by cash money that belongs to the company or fund to be available to finance the activities of the daily operations of the company, for example to pay salaries, buy raw material/goods, pay for the cost of transportation, pay debt and so on. From the above analysis, the company still tends to decline on the Net Working Capital is due to the increasing debts smoothly. To increase the net working capital, companies should increase company current assets such as cash and cash equivalents,receivables third parties, inventories and trade receivables other third parties so that they can increase the Net Working Capital of the company. Analysis of Working Capital Turnover of PT Perkebunan Nusantara III (Persero) Medan Table 2. Working Capital Turnover The Year The sale Current Assets Current Liabilities Working capital turnover ,538,892 2,421,826 2,141, ,963,806 2,318,056 1,724, ,732,518 2,126,848 1,787, ,520,136 13,828,815 19,548, ,212,111 15,347,177 21,110, Source: PT Perkebunan Nusantara III (Persero) Medan From the analysis that has been done by the researchers of the financial report of the company by using the formula of the rotation of the existing working capital, has obtained a calculation that can be interpreted: Based on the table above shows ISBN

9 that in the year 2012 circulation of the working capital decline, this is caused by the drop in sales as on the sale of oil palm, rubber and palm oil core and derivative while working capital (the difference in current assets to debt and smoothly) has increased. In 2013 circulation of the working capital increase, this was caused by the decrease in working capital is greater than the drop in sales as sales of oil palm, rubber and palm oil core and its derivative works. In the year 2014 circulation of the working capital decline, this is caused by the working capital experience minus although sales such as sales of palm oil products, rubber products, other plant products and other income has increased significantly. In 2015 circulation of the working capital decline this due to experience working capital minus and slowing sales of the company such as sales of palm oil products, rubber products, other plant products and other income. Based on the theory that delivered Riyanto (2011) working capital turnover is a comparison between sales by net working capital. Circulation of net working capital is current assets reduced debt smoothly. Low working capital turnover indicates the excess working capital, which may be caused by low levels of Inventorial Turns, receivables or the existence of the cash balance that is too large. So also on the contrary, if the circulation of higher working capital, may be caused by high Inventorial Turns, trade receivables or cash balance is too small. From the above analysis, the rotation of the working capital of the company tends to experience a decline due to the drop in sales, receivable and take advantage of the cash and cash equivalents so that there are no idle funds. To increase the Working Capital Turnover the company should increase sales home companies such as sales of oil palm, rubber and palm oil core so that the revolution of the working capital requirement can increase. Analysis of Profitability Ratio of PT Perkebunan Nusantara III (Persero) Medan From the analysis that has been done by the researchers of corporate financial report using these formulas profitability, has obtained a financial ratio calculation that can be interpreted as follows: Net Profit margins (NPM) Table 3. Net Profit Margin The Net Profit Sales NPM (%) Year ,260,273 6,538,892 19% ,691 5,963,806 14% ,304 5,732,518 6 percent ,611 39,520,136 2 percent ,266 36,212,111-2% 76 ISBN

10 Source: PT Perkebunan Nusantara III (Persero) Medan On the ratio of the above illustrates the amount of net profit obtained the company on every sale made. In 2011 the company has net profit margins of 19% and decline in 2012 to 14%, this is due to the decrease in net profit is due to the decrease in net sales, the net profit of the entities of the association and increasing general expenses and administration as well as Deferred tax. In 2013 net profit margins decline to 6 percent caused net profit decline, this because of declining net sales and increasing the burden of goods sold and increasing the burden of income tax as Deferred tax. In the year 2014 net profit margins decline back to 2 percent, this is due to the increased sales of larger compared with the net profit which include increasing the burden of marketing and sales, general expenses and administration, financial burden. In 2015 net profit margins also declined to reach minus, this was caused by the decrease of net profit to minus. The net profit minus caused sales and other operating income decline and increasing the burden of the burden of such as the burden of marketing and sales, operating expenses and other financial expenses. From the analysis above can be indicated that the ability of the company to produce the net profit from 2012 until 2015 has not been effective. According to Bastian and Suhardjono (2006), the net profit margin is a comparison between the net profit with the sale. The greater the net profit margins, then company performance will be more productive. This ratio shows how big the percentage of net profit obtained from each sale. The greater this ratio, then considered the better the ability of the company to get a high profit. From the above analysis, companies tend to decline in net profit margins, which due to the decrease in the net profit of the company. To increase the net profit margins, the company should increase the net profit of the company such as sales and other operating income and reduce the burden of the burden of such as the burden of marketing and sales, operating expenses and other financial expenses. Gross Profit Margins (GPM) Table 4. Gross Profit Margins The Gross Profit Sales GPM (%) Year ,731,503 6,538,892 42% ,408,723 5,963,806 40% ,872,343 5,732,518 33% ,594,457 39,520,136 24% ,471,499 36,212,111 23% ISBN

11 This ratio is useful to know the gross profit of the company from every goods sold. So knowing this ratio, companies can know that for every one of the rupiah goods sold, companies have of gross profit times rupiah. Look at the table above in 2011 the company have gross profit margins at 42 percent and decline in 2012 to 40%, this caused sales to fall so that the gross profit decline. In 2013 the gross profit margins decline to 33%, this is due to the decrease in net sales and increasing the burden of goods sold and gross profit decline. In the year 2014 gross profit margins decline to 24%, this is due to the increase of income is greater than the gross profit increase. And in 2015 gross profit margins also declined to 23%, this is due to the decrease in sales and gross profit decline. From the analysis above can be indicated that the financial performance of the company in 2011 until 2013 is good enough, but not maintained with maximum by management in the year 2014 and According to Syamsuddin (2007), the gross profit margin is the percentage of gross profit (sales-cost of goods sold) compared with sales. The greater the gross profit margins so the better state of the operations of the company, because it shows that the cost of goods sold relatively low compared with sales. So also on the contrary, the lower the gross profit margins and the less good operations of the company. Gross profit margins from the analysis above, tend to decline. This is due to the net sales, to improve gross profit margins company should increase net sales and reduce the burden of the sales point. Return On Assets (ROA) Table 5. Return On Assets The Year The Net Profit Total Assets ROA (%) ,260,273 9,086,304 14% ,691 10,208,927 8 percent ,304 11,016,569 3 percent ,611 65,675,909 1 percent , ,720,244-1% Source: PT Perkebunan Nusantara III (Persero) Medan Based on the above table can be seen that the return on assets in 2012 declined to 8 percent, this is due to the decrease in net profit is due to the decrease in net sales, the net profit of the entities of the association and increasing general expenses and administration as well as Deferred tax and total assets have increased as receivables others, inventories, tax paid in advance, other current assets, assets Deferred tax, invest in the stocks and plantation crops. 78 ISBN

12 In 2013 return on assets has declined to 3 percent, this because of decrease the net profit due to the decrease in net sales and increasing the burden of goods sold and increasing the burden of income tax as Deferred tax and total assets have increased as cash and cash equivalents, receivables others, tax paid in advance, other current assets, receivables long term, investment in shares of plantation and net fixed assets. In the year 2014 return on assets has declined to 1 percent, this is due to the increase in net sales and net profit increase so that the net profit increase, but greater total assets such as cash and cash equivalents, receivables, receivables others, preparation other current assets, long-term debt, assets clean, plantation crops and other current not assets. In 2015 return on assets decline to reach minus become -1%, this is due to the net profit decline due to net sales decline of sales and other operating income decline and increasing the burden of the burden of such as the burden of marketing and sales, other operating expenses and financial burden while total assets has increased as its usage restricted Cash, Trade Receivables other third party, tax paid in advance, other current assets, assets Deferred tax, plantation crops, assets clean and other current not assets. From the analysis above can be indicated that the ability of the company to produce the spider from 2012 until 2015 has not been effective. According Dendawijaya (2003), the ratio is used to measure the ability of management to obtain the benefits (net) overall. The greater the return on assets, the greater the level of Profit achieved by the company and the better nor the position of the company in terms of use of assets. Return on assets from the analysis above, tend to decline. This is due to the decrease in net sales and net profit decline. To improve the return on assets, the company should take advantage of the cash and cash equivalents to increase sales, investment income, other operating income and reduce the burden of the burden of such as the burden of marketing and sales, operating expenses and other financial expenses. Analysis of the Net Working Capital and Working Capital Turnover in Increase Profitability Table 6. Net Working Capital and Working Capital Turnover in Increase Profitability The Year Working Capital Working Capital Turnover Profitability Ratio ISBN

13 NPM GPM Comprise s , % 42% 14% , % 40% 8 percent , percent 33% 3 percent ,719, percent 24% 1 percent ,763, % 23% -1% To obtain a number of specific spiders, not escape from the working capital that is needed in the operational activities of the company. The better working capital is used, then the greater the probability of the company to obtain the spider. Working Capital obtained from the results of the sale of goods and other results that improve cash money. But the majority of working capital should be used to close the cost of sales and business costs that has been issued. To test the efficiency of the use of working capital researchers can use the working capital turnover. Working capital turnover or working capital turnover is one of the ratio to measure or assess the effectiveness of the company working capital for a certain period. That happened to PT Perkebunan Nusantara III (Persero) Medan that there are some period that decline in working capital and the working capital turnover's profitability ratio becomes unstable, namely the ratio of net profit margins, gross profit margins and return on assets. This can be seen from the calculation of the working capital, Working Capital Turnover and the profitability ratio (net profit margins, gross profit margins and return on assets) as follows: From the table above, on 2011 to 2012 working capital increase, but the revolution of the working capital and net profit margins, gross profit margins and return on assets to decline. Working capital increase due to the debt reduction smoothly is greater than the decline in current assets. Working capital turnover decline due to sales fell and the working capital (the difference in current assets to debt and smoothly) has increased. While a drop in net profit margins due to the decrease of net profit, a decrease in the gross profit margins due to the gross profit decline and the decline in return on assets due to the net profit decline and total assets has increased. In 2013 the working capital decline, but the rotation of the working capital increase and net profit margin gross profit margins and return on assets to decline. The working capital decline due to the current assets declines and debts smoothly increase. Working capital turnover decline due to the decrease in working capital decline is larger compared with the drop in sales. While a drop in net profit margins due to the decrease of net profit, a decrease in the gross profit margins due to the drop in sales and a decline in return on assets due to the steep drop in net profit. 80 ISBN

14 In the year 2014 working capital and working capital turnover decline to reach minus followed by a decline in net profit margins, gross profit margins and return on assets to decline. The working capital decline due to the increase of debts smoothly greater. Working capital turnover decline due to experience working capital minus although sales have increased significantly. While a drop in net profit margins due to increased sales of greater than with the increase of net profit, a decrease in the gross profit margins due to the sales increase is greater than the gross profit increase and decrease on the return on assets due to the increase in net sales. In 2015 working capital and working capital turnover decline to reach minus followed by a decline in net profit margins, gross profit margins and return on assets. The working capital decline due to the increase of debts smoothly greater. Working capital turnover decline due to experience working capital minus and slowing sales. While a drop in net profit margins due to the decrease of net profit to minus, a decrease in the gross profit margins due to the drop in sales and a decline in return on assets due to the decrease of net profit and increased total assets. From the analysis above, it can be concluded that the net working capital and work turnaround in improving the profitability of the optimal yet, this can be seen from the profitability that tend to decline from 2012 until Declining profitability that includes the net profit margins due to the net profit of the company, a decrease in the gross profit margins due to the decrease in net sales and a decline in return on assets due to the decrease in net sales and increasing the burden of the burden of such as the burden of marketing and sales, operating expenses and other financial expenses. Profitability decline can be overcome by increasing the Net Working Capital of assets and increase sales that can increase the profitability of the company, because according to Martono and Agus Harjito (2001) who say that when the increased working capital and profitability also increased" and Bambang Riyanto (2001) said that "High profitability ratio influenced by the rotation of the company working capital". CONCLUSIONS The decrease in net working capital occurs due to current liabilities components such as accrued expenses, short-term bank loans, and repayment of mature debts. This becomes inefficient considering the working capital is needed by every company, because working capital is the company's ability to run the company's operations after covering its current liabilities ISBN

15 Increased working capital turnover occurs because the Net Working Capital (current assets subtracted from debts smoothly) declined significantly. Declining circulation due to working capital current assets less than the debts smoothly so that the working capital experience minus, so that the rotation of the working capital also experience minus although sales have increased. The ratio of profitability tends to decline, this because of slowing sales of the company so that the company would also profit decline. Suggestions The company should improve working capital and optimize the sale, so it is able to cover the debts that must be paid immediately and pressing costs so that it can increase the profitability of the company. We recommend that the current liabilities of the company should not exceed the amount of current assets of the company, as it may lead to a situation in which the company is unable to pay its current liabilities. To reduce the current liabilities of the company can be done by paying current liabilities from the company's earnings. It is expected that the management of the company to manage working capital effectively so that there is no idle funds. With the lack of idle working capital and corporate capability in managing the operational activities of the company will achieve maximum results. REFERENCES Agus Sartono (2001). Financial Management Theory and Applications. Yogyakarta: BPFE. Aliminsyah dan Padji Kamus Istilah Akuntansi. Cetakan Kesatu. Bandung: CV. Yrama Widya Aris Setia Noor and Berta Lestari, 2012, Analisis Pengaruh Efisiensi Modal Kerja, Likiuditas, dan solvabilitas Terhadap Profitabilitas (studi pada Industri Barang Komsumsi di Bursa Efek Indonesia) Bastian, Idra., Suhardjono, (2006). Accounting for Banking, Jakarta: Salemba Empat. Dendawijaya Lukman Banking Management, Second Edition. Jakarta: Ghalia Indonesia Jumingan (2005). Analysis of Financial Report. Jakarta: Earth characters. Kasmir (2008). Analysis of Financial Report. Jakarta: PT King Grafindo Persada. Martono and Agus Harjito (2001). Credit Management. Jakarta: Bumi Aksara. (2005). Financial Management. Yogyakarta: Ekonisia. 82 ISBN

16 Munawir (2014). Financial Report Analysis. Yogyakarta: Liberty. Raharjaputra (2009). Financial Management and Accounting For Corporate Executive. Jakarta: PT RajaGrafindo Persada. Riyanto, Bambang. (2011). The Company Spending Basics. Yogyakarta : BPFE Sawir, Agnes, (2005). Analysis of the Financial Performance And Financial Planning Company. Jakarta: PT Gramedia Pustaka. Syamsudin, Lukman. (2007). Corporate Finance Management; Application Concept In Planning, Supervision, and Decision Making. Jakarta: Raja Grafindo Persada ISBN