The Effect of Working Capital and Operating Cost on the Profitability of PT Adhi Karya in 2021–2023

Abstract

Corporate financial management literature often mentions about the relationship between working capital and operational costs when it comes to profitability. These two should be well balanced to maintain the health of the firm’s finances since the large costs endured by a company will decrease the company’s profitability. Therefore, a company must have capital that at least meets the amount of operating costs in a company. This study aims to examine the effect of working capital and operating costs have on profitability in a company who has a struggle to manage effective working capital. Using quantitative methods, we found that working capital affects profitability, but operational costs surprisingly do not affect profitability