The Impact of Cash Flow and Working Capital Efficiency on Liquidity of Indonesian Construction Firms

Abstract

This study examined the associations between operating cash flow, working capital turnover, and receivables turnover with liquidity in construction firms listed on the Indonesia Stock Exchange (IDX) during 2019–2024. A quantitative correlational design was used with secondary financial statement data. Purposive sampling identified 12 firms and 72 firm-year observations. The source thesis specifies a natural-log (Ln) transformation and reports 43 valid listwise observations but does not provide the transformation syntax or variable-level case-screening record. Liquidity is proxied by the quick ratio. Multiple linear regression, classical assumption tests, partial t-tests, simultaneous F-tests, and coefficients of determination were applied. Operating cash flow was positively and significantly associated with liquidity (B=0.156, p<0.001), whereas working capital turnover was negatively and significantly associated (B=−0.426, p<0.001). Receivable turnover is positively and significantly associated with liquidity (B=0.183, p=0.030). Collectively, the predictors were significant, F (3,39) =31.033, p<0.001, and explained 70.5% of the variation in liquidity. Liquidity in listed construction firms is associated with internally generated operating cash, working capital use intensity, and collection effectiveness. The final analytical sample was smaller than the initial observation set, the exact transformation and exclusions cannot be reproduced from retained materials, and working capital turnover shares balance-sheet components with the liquidity proxy. This study provides sector-specific, practice-relevant association evidence from an industry characterized by complex long project cycles, substantial financing needs, milestone-based billing, and uneven project-related cash receipts.

Keywords

construction firms liquidity operating cash flow receivables turnover working capital turnover