Abstract:
This study aims to determine the effect of working capital and the effectiveness
of the use of working capital on the level of profitability in insurance companies.
The variables used in this study are working capital and the effectiveness of the
use of working capital as an independent variable and profitability as a
dependent variable. Working capital is measured by working capital turnover (X1),
the effectiveness of the use of working capital is measured by cash turnover (X2)
and profitability is measured by return on investment (Y). The population in this
study is an Insurance Company listed on the Indonesia Stock Exchange from
2011-2015. The sample in this study is taken by using purposive sampling criteria
and samples that meet the criteria has been determined as many as 50 financial
statements. The type of data used in this study is secondary data originating and
published from the Indonesia Stock Exchange (BEI). The collected panel data is
then analyzed by using model test, classical assumption, multiple regression
analysis, t test, and determinant coefficient analysis to see the level of conformity
of the analysis. The result of this research shows that the rotation of working
capital has a positive effect on profitability, it can be seen from t value> t table
(2.181> 2.010) and cash turnover has no significant effect on profitability, can be
seen from t value <t table (-1,771 <2.010).
