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Purpose: The purpose of this study was to find out and analyze the Influence of the Current ratio and Receivable turnover on Profitability.
The theoretical framework: Evaluating profitability through various ratios, companies can be classified into two categories: margin ratios and return ratios. Liquidity, activity, and profitability are important issues to be continuously monitored, that’s why the study uses the Current ratio and the Receivable turnover as tools in finding the relation between the Current ratio and Receivable turnover on Profitability partially and simultaneously.
Methodology: The research method used in this study is a descriptive survey and an explanatory survey. The unit of analysis in this study is the LQ45 company’s financial statements on the IDX for the 2021 period. The type of investigation is causality, and the time horizon in this study is time series. This study uses multiple regression analysis.
Finding: Partially and Simultaneously, the Current ratio and Receivable turnover have a significant effect on Profitability. Receivable turnover is more dominant in influencing Profitability, it becomes the first priority in increasing Profitability.
Research Policy Implications: In efforts to increase profitability, the main priority is to have increased Receivable Turnover to maintain business continuity. To increase accounts receivable turnover, these companies are expected to be able to encourage acceleration and accuracy of collection of accounts receivable, with the intention that investment is not fixated on just one sector, for example only focusing on fixed assets, so that the company's financial stability can be maintained properly. Increasing the current ratio by optimizing the elements of current assets to cover all of the company's current liabilities.
Originality/value: Companies are advised to consistently improve accounts receivable turnover; so that the company's financial performance will improve.
