The Effect of Company Size as a Mediating Variable on the Relationship of Working Capital to Profitability

Susanti Widhiastuti


Working capital is one of the most important asset elements in a company because, without working capital, the company cannot meet its activities. Profitability is the company's ability to generate net income from activities carried out in the accounting period. Furthermore, the company's size, the size of the company can be determined based on total sales, total assets, and the average level of sales. This study aims to examine and analyze the effect of working capital on profitability mediated by company size. By using data from real estate companies listed on the IDX during the 2016-2019 period. The analytical tool in this research is SEM PLS with the application of Warp PLS version 7.0. This research proves that working capital and sales growth can be mediated by company size on profitability. That is in line with the signaling theory, which states that investors will adjust their decisions according to their understanding of the signals given by the company owner.



Keywords: size, working capital, signaling theory, return on assets.



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