Analysis of the Effect of Changes in Net Operating Cash Flow, Net Working Capital, Operating Profit and Company Size on Stock Return

Kusmanto Kusmanto

doi:10.61255/jeemba.v4i5.1805

Authors

Kusmanto Universitas Gunung Kidul, Indonesia

DOI:

https://doi.org/10.61255/jeemba.v4i5.1805

Keywords:

Current Cash Operational, Capital Work, Profit Accounting, Company Size, Return Sham

Abstract

Purpose – This study investigates the effects of changes in operating cash flow, net working capital, accounting profit, and firm size on stock returns of mining sector companies listed on the Indonesia Stock Exchange (IDX).

Design/methodology/approach – A quantitative explanatory research design was employed using secondary data obtained from the Indonesian Capital Market Directory (ICMD) and annual financial reports for the 2005–2009 period. Purposive sampling was applied, resulting in a sample of nine mining companies from a population of 23 listed firms. Data were analyzed using multiple linear regression with SPSS 12.0. Classical assumption testing included the Kolmogorov–Smirnov normality test, while t-tests and F-tests were conducted at a 5% significance level to evaluate partial and simultaneous effects.

Findings/Results – The findings indicate that operating cash flow, net working capital, accounting profit, and firm size jointly have a significant effect on stock returns. Partially, accounting profit and firm size significantly influence stock returns, whereas changes in operating cash flow and net working capital do not show significant individual effects. These results suggest that profitability and company scale are stronger determinants of stock returns than liquidity-related indicators in the mining sector.

Originality/Value – This study contributes to the understanding of financial determinants of stock returns in Indonesia’s mining industry by highlighting the greater importance of accounting profit and firm size compared with operating cash flow and working capital in explaining investors’ market returns.

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