Assessing Liquidity: The Role of Cash Flow, Receivables and Inventory Turnover

Abstract

This study aims to analyze the effect of operating cash flow, accounts receivable turnover, and inventory turnover on company liquidity in retail sub-sector companies listed on the Indonesia Stock Exchange (IDX) during the period 2020–2023. Liquidity is measured using the Current Ratio (CR), operating cash flow is measured using the Operating Cash Flow Ratio (OCF), accounts receivable turnover is measured using the Accounts Receivable Turnover Ratio (ART), and inventory turnover is measured using the Inventory Turnover Ratio (ITR). The data used in this study were obtained from the financial reports of 14 retail companies selected using a purposive sampling technique, resulting in a total of 56 observations over four years. Data analysis was conducted using SPSS software with multiple linear regression analysis. The results show that operating cash flow (OCF) has a positive and significant effect on company liquidity. However, accounts receivable turnover (ART) and inventory turnover (ITR) do not have a significant effect on liquidity. Simultaneously, the three independent variables do not significantly affect company liquidity. The coefficient of determination (R²) value is 0.192, or 19.2%.