ANALYSIS OF ACCOUNTS RECEIVABLE MANAGEMENT TOWARDS LIQUIDITY, CASH CONVERSION CYCLE, AND PROFITABILITY OF PT. XYZ

Abstract

Title : Accounts Receivable Management towards Liquidity, Cash Conversion Cycle, and Profitability of PT. XYZ Economic growth in Indonesia is growing rapidly over the last few years. This economic growth is supported by small to large industries. One of the supporting industries comes from automotive manufacturing industry. PT. XYZ is one of the biggest global car manufacturing which already run the business in Indonesia for decades. Although PT. XYZ already run the business in Indonesia for a long time, the sales of PT. XYZ is still far below the company’s competitors. The purpose of this research is to analyze the accounts receivable management of PT. XYZ, also to analyze and determine the company’s liquidity, cash conversion cycle, and profitability through calculation of PT. XYZ’s liquidity ratio, cash conversion cycle, and profitability ratio from year 2008 until year 2012. The quantitative data is obtained from the calculation of data in PT. XYZ’s statement of financial position and statement of comprehensive income. The data is calculated by using accounts receivable turnover, average collection period, liquidity ratio, cash conversion cycle, and profitability ratio formulas. PT. XYZ already performed the management and controlling process based on the rules applied in PT. XYZ, but in the practice there still many dealers that do not comply with the rules applied by PT. XYZ. Factors that affecting the amount of accounts receivable are divided into internal factors and external factor. The internal factors are credit sales, billing effort, sales procedure, and doubtful accounts. The external factor is dealers’ financial condition. Based on the analysis of liquidity, cash conversion cycle, and profitability of PT. XYZ, generally the liquidity, cash conversion cycle, and profitability is still fluctuating. The liquidity, cash conversion cycle and profitability is declining start from year 2011, it is because the appliance of the new procedure in year 2011. PT. XYZ still has a liquidity problem until year 2012, it can be seen from the result of the liquidity ratios which average below 2.