The Influence Cash Conversion Cycle, Capital Structure and Profitability to Intrinsic Value on Consumer Goods Company in Indonesia

Abstract

Objectives: To examine the influence cash conversion cycle, capital structure and profitability to intrinsic value on consumer goods company in Indonesia Stock Exchange

Method/ Analysis: The paper usepath analysis to analyze cross-sectional data covering 30 consumer goods company listed in Indonesia Stock Exchange for period 2012 to 2015. cash conversion cycle and capital structure as independent variable, instrinsic value as dependent variable and profitability as intervening variable. this study use free cash flow to firm valuation to calculate intrinsic value, total debt to total asset to calculate capital structure and return on asset to calculate profitability.

Findings: This study found that capital structure and profitability significantly affect direct to intrinsic value, cash conversion cycle not significantly affect direct to intrinsic value, cash conversion cycle and profitability significantly affect indirectly to intrinsic value using profitability as variable intervening at alpha 5%. This show that cash conversion cycle not directly affect to profitability, and this profitability will affect intrinsic value. this study may be useful for student, financial manager, investor, financial consultant, appraisal and many other stakeholder in Indonesia so they can more aware about efficiency of cash conversion cycle, capital structure, profitability to intrinsic value.

Keywords: Cash Conversion Cycle, Capital Structure, Profitability, Intrinsic Value