The Effect of Working Capital Policy on the Liquidity of Food and Beverage Companies on the Jakarta Stock Exchange

Oct 13, 2025 by pynkocean.com 5 views

The Effect of Working Capital Policy on the Liquidity of Food and Beverage Companies on the Jakarta Stock Exchange

In today's fast-paced business environment, every company, regardless of its size, requires capital to start and run its operations. The funds spent are expected to return to the company through product sales, creating a sustainable capital turnover cycle as long as the company operates. However, defining capital with certainty is indeed difficult because economists have a different perspective. Large, in the book Bambang Riyanto (1999), defines capital only as money (geldkapital), while Schwiedland provides a broader understanding, including money (geldkapital) and goods (sachkapital) such as machines, merchandise, and others.

Understanding Capital in the Balance Sheet

Bambang Riyanto (1999) explains that capital in the balance sheet can be divided into concrete capital and abstract capital. Concrete capital refers to the physical form of capital listed on the debit of the balance sheet, describing the overall funds obtained and implanted by the company. Concrete capital elements can change and change, such as:

*** Fixed Capital: ** The assets used in the long run such as land, buildings, and machines. *** Current Capital: ** Assets used in the short term such as inventory, receivables, and cash.

The Importance of Working Capital Policy

Working capital is an important part of capital that plays a role in the smooth operation of the company's daily. The right working capital policy can increase company liquidity, namely the company's ability to fulfill its financial obligations on time. Working capital policy affects liquidity through several aspects, including:

*** Inventory Management: ** Appropriate policy in managing inventory can avoid the accumulation of goods that drain working capital and increase liquidity. *** Receivable Management: ** Collecting receivables in a timely manner can increase cash flow and liquidity. *** Cash Management: ** Good policy in managing cash, such as optimizing cash balances and the application of an efficient payment system, can maintain liquidity.

The Food and Beverage Industry on the Jakarta Stock Exchange

The food and beverage industry in Indonesia has great potential. However, fierce competition and fluctuations in raw material prices are a challenge for companies in this sector. To survive and develop, food and beverage companies need to implement effective working capital policies to maintain liquidity and operational smoothness.

The Importance of Analysis and Implementation

It is essential for food and beverage companies to conduct in-depth analysis of the effect of working capital policies on liquidity. The analysis can include:

*** Liquidity Ratio: ** Comparing current assets with short-term obligations to measure the company's ability to fulfill its financial obligations. *** Working Capital Turnover: ** Demonstrate company efficiency in managing working capital.

Based on the results of the analysis, companies can implement appropriate working capital strategies and policies, such as:

Inventory Optimization: ** Implement an effective inventory management system to minimize wasted inventory and optimize the use of working capital. *** Increasing the Efficiency of Receivables: ** Applying a structured billing system and utilizing technology to speed up the billing process. *** Setting the Cash Flow: ** Implement an integrated cash management system to optimize cash use and minimize the risk of cash deficiencies.

Case Study: Food and Beverage Companies on the Jakarta Stock Exchange

To illustrate the importance of working capital policy, let's consider a case study of a food and beverage company listed on the Jakarta Stock Exchange. The company, XYZ Food, is a leading manufacturer of instant noodles in Indonesia. However, the company has been facing challenges in managing its working capital, resulting in a decrease in liquidity and operational smoothness.

Analysis and Implementation

XYZ Food conducted an in-depth analysis of its working capital policy and found that the company's inventory management system was inefficient, resulting in a significant accumulation of goods that drained working capital. The company also found that its receivable management system was slow, resulting in a decrease in cash flow and liquidity.

Based on the results of the analysis, XYZ Food implemented the following working capital strategies and policies:

*** Inventory Optimization: ** The company implemented an effective inventory management system to minimize wasted inventory and optimize the use of working capital. *** Increasing the Efficiency of Receivables: ** The company applied a structured billing system and utilized technology to speed up the billing process. *** Setting the Cash Flow: ** The company implemented an integrated cash management system to optimize cash use and minimize the risk of cash deficiencies.

Conclusion

The right working capital policy is very important for food and beverage companies on the Jakarta Stock Exchange. By managing working capital effectively, companies can increase liquidity, increase efficiency, and strengthen their position in fierce competition in this industry. In conclusion, working capital policy is a critical aspect of a company's financial management, and its effective implementation can have a significant impact on a company's liquidity and operational smoothness.

Recommendations

Based on the findings of this study, the following recommendations are made:

*** Conduct Regular Analysis: ** Food and beverage companies should conduct regular analysis of their working capital policy to identify areas for improvement. *** Implement Effective Working Capital Strategies: ** Companies should implement effective working capital strategies and policies, such as inventory optimization, receivable management, and cash management. *** Monitor and Evaluate: ** Companies should monitor and evaluate the effectiveness of their working capital policy and make adjustments as necessary.

By following these recommendations, food and beverage companies on the Jakarta Stock Exchange can improve their liquidity and operational smoothness, ultimately leading to increased efficiency and competitiveness in the industry.
Frequently Asked Questions (FAQs) on Working Capital Policy and Liquidity

In our previous article, we discussed the importance of working capital policy in maintaining liquidity and operational smoothness for food and beverage companies on the Jakarta Stock Exchange. However, we understand that there may be many questions and concerns regarding working capital policy and liquidity. In this article, we will address some of the frequently asked questions (FAQs) on this topic.

Q: What is working capital policy?

A: Working capital policy refers to the strategies and procedures used by a company to manage its working capital, which includes inventory, receivables, and cash.

Q: Why is working capital policy important?

A: Working capital policy is important because it affects a company's liquidity and operational smoothness. Effective working capital policy can help a company to maintain liquidity, increase efficiency, and strengthen its position in the market.

Q: What are the key components of working capital policy?

A: The key components of working capital policy include:

Inventory management
Receivable management
Cash management

Q: How can a company improve its inventory management?

A: A company can improve its inventory management by implementing an effective inventory management system, such as just-in-time (JIT) inventory management, and by minimizing waste and excess inventory.

Q: How can a company improve its receivable management?

A: A company can improve its receivable management by implementing a structured billing system, utilizing technology to speed up the billing process, and by following up with customers to ensure timely payment.

Q: How can a company improve its cash management?

A: A company can improve its cash management by implementing an integrated cash management system, optimizing cash balances, and by minimizing the risk of cash deficiencies.

Q: What are the benefits of effective working capital policy?

A: The benefits of effective working capital policy include:

Improved liquidity
Increased efficiency
Strengthened market position
Reduced risk of cash deficiencies

Q: What are the challenges of implementing effective working capital policy?

A: The challenges of implementing effective working capital policy include:

Lack of resources and expertise
Inadequate technology and systems
Resistance to change from employees and stakeholders
Difficulty in measuring and evaluating the effectiveness of working capital policy

Q: How can a company measure and evaluate the effectiveness of its working capital policy?

A: A company can measure and evaluate the effectiveness of its working capital policy by using metrics such as:

Liquidity ratio
Working capital turnover
Inventory turnover
Receivable turnover
Cash conversion cycle

Q: What are the best practices for implementing effective working capital policy?

A: The best practices for implementing effective working capital policy include:

Conducting regular analysis and review of working capital policy
Implementing effective inventory management, receivable management, and cash management systems
Utilizing technology and systems to support working capital policy
Providing training and education to employees and stakeholders
Continuously monitoring and evaluating the effectiveness of working capital policy

Conclusion

In conclusion, working capital policy is a critical aspect of a company's financial management, and its effective implementation can have a significant impact on a company's liquidity and operational smoothness. By understanding the key components of working capital policy, the benefits and challenges of implementing effective working capital policy, and the best practices for implementing effective working capital policy, companies can improve their liquidity and operational smoothness, ultimately leading to increased efficiency and competitiveness in the market.