The effect of cash conversion cycle and firm size on the profitability of manufacturing companies

One of the factors affecting profitability is the cash conversion cycle. Therefore, every company should pay attention to the factors affecting their profitability. The purpose of this research was to identify how the cash conversion cycle and firm size influence the profitability of manufacturing companies. The independent variable of this research was the cash conversion cycle and firm size, measured through the natural logarithm (Ln) of the total assets while the dependent variable was profitability as measured by Return On Asset and Return On Equity. The data used were 309 companies listed on the Indonesia Stock Exchange in the period of 2011-2013 which had a positive profit and equity. The results indicated that the cash conversion cycle had a significantly negative effect on the profitability of the company, whether measured by ROA or ROE with a significance level of 0.024 and 0.0004, while the firm size significantly influenced the companies' profitability as measured by the ROA and the ROE with the significance level of 0.670 and 0.221.