The Correlation between Working Capital Management and Profitability in an LPG Distribution Micro Enterprise

Septia Esi Putri; Arfianti Novita  Anwar; Ratna  Dewi

doi:10.68376/MANTRA.v1.i1.a86

Authors

Septia Esi Putri Management Study Program, Faculty of Economics, University of Pasir Pengaraian, Indonesia Author
Arfianti Novita Anwar Management Study Program, Faculty of Economics, University of Pasir Pengaraian, Indonesia Author
Ratna Dewi Management Study Program, Faculty of Economics, University of Pasir Pengaraian, Indonesia Author

DOI:

https://doi.org/10.68376/MANTRA.v1.i1.a86

Keywords:

Correlation, Working Capital Management, Profitability

Abstract

This study aims to analyze the correlation between cash turnover and working capital turnover and the profitability of the 3-kilogram Liquefied Petroleum Gas (LPG) distribution business Aulia Sumber Jaya in Pasir Pandak, Rokan Hulu Regency. This study employed a quantitative method using secondary data obtained from the business's financial statements for the 2021–2025 period. Data were analyzed using descriptive statistics, classical assumption testing, multiple linear regression, the coefficient of determination test, the t-test, and the F-test. The results show that cash turnover has a negative and not significant correlation with profitability, indicating no real association with increased profit, whereas working capital turnover has a significant correlation with profitability, such that more effective management of working capital is associated with higher profit. Simultaneously, cash turnover and working capital turnover have a positive and significant correlation with profitability, indicating that sound joint management of both can improve profit. It is recommended that Aulia Sumber Jaya optimize its working capital management to improve profitability, while continuing to manage cash flow properly to maintain operational continuity and liquidity.

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