The impact of profitability towards cash holdings

Faustine, Felicia (2025) The impact of profitability towards cash holdings. Bachelor thesis, Universitas Pelita Harapan.

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Abstract

This study examines how profitability, measured by Return on Assets (ROA), influences cash holding levels in consumer non-cyclical companies listed on the Indonesia Stock Exchange, focusing on cash management approaches within a sector marked by stable consumer demand. Financial data for the analysis were collected from S&P Capital, IDX, and official company websites, with purposive sampling used to select 47 companies over a five-year period, resulting in 235 observations. The data were analyzed using IBM SPSS 29, applying descriptive statistics, correlation analysis, classical assumption tests, multiple linear regression, and hypothesis testing to assess the relationship between profitability and cash holdings. Results show a positive but statistically insignificant association between profitability and cash holdings, suggesting that firms in this sector prioritize reinvestment and dividend distribution over cash accumulation. This adaptive approach indicates that profitability is often directed toward supporting operational growth and meeting shareholder expectations rather than building up cash reserves. These findings offer practical insights for companies seeking to manage liquidity effectively, assist investors in evaluating financial resilience, and support researchers in exploring the nuanced relationship between profitability and cash management in stable sectors./ Penelitian ini meneliti bagaimana profitabilitas, yang diukur dengan Return on Assets (ROA), memengaruhi tingkat kepemilikan kas pada perusahaan konsumen non-siklikal yang terdaftar di Bursa Efek Indonesia, dengan fokus pada pendekatan manajemen kas dalam sektor yang ditandai oleh permintaan konsumen yang stabil. Data keuangan untuk analisis dikumpulkan dari S&P Capital, IDX, dan situs web resmi perusahaan, dengan menggunakan metode purposive sampling untuk memilih 47 perusahaan selama periode lima tahun, menghasilkan 235 observasi. Data dianalisis menggunakan IBM SPSS 29, menerapkan statistik deskriptif, analisis korelasi, uji asumsi klasik, regresi linear berganda, dan uji hipotesis, untuk menilai hubungan antara profitabilitas dan kepemilikan kas. Hasilnya menunjukkan hubungan positif namun tidak signifikan secara statistik antara ROA dan kepemilikan kas, yang mengindikasikan bahwa perusahaan di sektor ini lebih memprioritaskan reinvestasi dan distribusi dividen daripada akumulasi kas. Pendekatan adaptif ini menunjukkan bahwa profitabilitas sering kali diarahkan untuk mendukung pertumbuhan operasional dan memenuhi ekspektasi pemegang saham daripada membangun cadangan kas. Temuan ini memberikan wawasan praktis bagi perusahaan yang ingin mengelola likuiditas secara efektif, membantu investor dalam mengevaluasi ketahanan keuangan, dan mendukung peneliti dalam mengeksplorasi keterkaitan antara profitabilitas dan manajemen kas di sektor yang stabil.
Item Type: Thesis (Bachelor)
Creators:
Creators
NIM
Email
ORCID
Faustine, Felicia
NIM03012210046
feliciafaustine88@gmail.com
UNSPECIFIED
Contributors:
Contribution
Contributors
NIDN/NIDK
Email
Thesis advisor
Sitompul, Thomson
NIDN0304019301
thomson.sitompul@uph.edu
Uncontrolled Keywords: Profitability; cash holding; consumer non-cyclical
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
Divisions: University Subject > Current > Faculty/School - UPH Medan > Business School > Accounting
Current > Faculty/School - UPH Medan > Business School > Accounting
Depositing User: Felicia Faustine
Date Deposited: 11 Apr 2025 05:44
Last Modified: 11 Apr 2025 05:44
URI: http://repository.uph.edu/id/eprint/68045

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