Acompanycanmaximizeitsprofitifthefinancialmanagerknowsthefactorsthathavemajorinfluenceonprofitability.Thecompanycandeterminestepstoovercomeproblemsandminimizethenegativeimpact.Therearemanyfactorsthataffectthecompanyprofitability.Factorscanbemeasuredbyusingfinancialratio,financialsuchascurrentcapitalturnover,currentratioandcurrentsalegrowth,companysizeanddebitratiocanbeusedtodeterminetheeffectofeachvariableoncompany’sprofitability. Profitabilitycanmeasurehowmuchgrowthacompanyearnintermofsale,assetsandprofitsforitsowncapital.Themeasureofsuccessofamanagercanbeseenfromtheabilitytocreateprofitability.Increasingprofitabilityisthemostimportanttaskforamanger.Managersareconsistentlyproportionofdebtisgreaterthanequity.Profitabilityratioisusedtoshowhowmuchprofitisderivedfromthecompanyperformance.Theformulaisasfollows: ROA=Earningsaftertax TotalAssets Leverageisastrategythatcompaniesusedtoincreaseassets.Itpaysshort-termandlong-termdebts.Theyusefixedassetstoincreasingcompanyincome.Theyalsousedtomeasurelevelofsolvency.Theuseofdebtthatistoohighwillindangerthecompanybecausethecompanywillenterintoextremeleveragethatiscompanytrappedinhighlevelofdebtandit’sdifficulttoreleasethedebtburden.Thereforethecompanymustbalancehowmuchdebtisworthtakingandfromwhichsourcescanbeusedtopayoffdebt.Leveragehasnosignificanteffectonprofitability.Theformulaisasfollows Debtofequityratio=TotalLiabilities Totalshareholder’sequity Tomeasuretheleverageofresearchersusingdebtofequityratio.DERistheratiothatillustratestheratioofdebtandequityincorporatefundingandshowtheabilityofthecompanyowncapitaltomeetsitsobligations. Liquidityshowthecompanyabilitytomeetsitfinancialobligations.Italsoshowtheabilityofshort-termobligationssuchasloans,staffwages,billsandtax.Theyshowpositiveeffectonprofitability.Forexample:whenahumantakeoutaloantopurchaseanassetorwiththehopeofgrowingtheirmoneyinfuture.Currentdebtispaymentobligationsinoneyearandanormaloperatingcycleinbusiness.Currentratioistheratiobetweentheamountofcurrentassetsandcurrentdebts.Hereistheformulausedtocalculatethecurrentratio: CurrentRatio=Currentassets Currentliabilities WorkingCapitalisthemoneyavailabletomeetyourcurrentobligations.Theexistenceofhighlevelofworkingcapitalturnoverindicatesthatthecompanyhasanopportunitytoachieveahighprofitgrowthinthefuture.Aratiothatmeasures,howefficientlyacompanyisusingitsworkingcapitaltosupportitssalesandgrowths.HereistheformulaofWorkingcapitalratio. WorkingCapitalturnover=Sales Currentassets–Currentliabilities Previousresearch: Previousresearchthatcansupportthisresearchisasfollows:Putranto[15]inhisresearchentitled”TheEffectofDiversification,Leverage,andInflationStrategiesontheProfitabilityofFood&BeverageCompanies”.Theresultsshowedthatthediversificationstrategyhadapositiveeffectoncompanyprofitability;leveragehadapositiveeffectoncompanyprofitabilitybutwasnotinaccordancewiththehypothesis,whileinflationdidnotaffectthecompany’sprofitability. WijayaandIsnani[16]intheirstudyentitled”TheEffectofWorkingCapitalEfficiency,Liquidity,andSolvencyontheProfitabilityofPharmaceuticalCompanies”.TheresultsshowedthattheWorkingCapitalTurnover(WCT),DebttoEquityRatio(DER)partiallyhadanegativeandnotsignificanteffectonReturnonAssets(ROA).CurrentRatio(CR)hasapositiveandsignificanteffectonReturnonAssets(ROA). YulianitaandIsynuwardhana[17]intheirstudyentitled”TheEffectofWorkingCapitalTurnover,Liquidity,andLeverageonProfitability(EmpiricalStudyofConsumerGoodsCompaniesListedontheIndonesiaStockExchangeforthe2015-2017Period)”.TheresultsshowedthatsimultaneouslyshowedWorkingCapitalTurnover(WCOT),Liquidity(CR),andLeverage(DER)significantlyinfluenceProfitability(ROA).Partially,WorkingCapitalTurnover(WCOT)hasasignificanteffectonprofitability(ROA),whileLiquidity(CR)andLeverage(DER)havenosignificanteffectonprofitability(ROA). Framework: Basedonthetheoreticalbasisandtheresultsofpreviousstudiesandtheproblemsthathavebeenraised,thenasabasisforformulatingahypothesis,thefollowingframeworkispresentedintheresearchmodelinthefollowingfigure: HYPOTHESIS: Theresearchhypothesesproposedareasfollows:Ha1=WorkingCapitalTurnoveraffectsProfitability.Ha2=LiquidityaffectsProfitability.Ha3=Leverageaffectsprofitability. RESEARCHMETHODS:Typesofresearchthisresearchiscausalresearch.Thetypeofresearchusedinthisstudyiscasualassociativeresearch(causalassociativeresearch).AccordingtoSanusi[11],associative-causalresearchisresearchthatlooksforrelationshipsbetweentwoormorevariables.Thepurposeofassociativeresearchistolookforrelationshipsbetweenonevariableandanother. DefinitionofVariableOperations: Thevariablesusedinthisstudyconsistedofthedependentvariableandtheindependentvariable.OperationalresearchvariablesontheEffectsofWorkingCapitalTurnover,Liquidity,andLeverageonProfitabilitycanbesummarizedintable1.1. Table-1.1:OperationalizationofVariables TypesofVariables OperationalDefinition Formula Scale Dependent Profitability Oneindicatortoassessthelevelofeffectivenessofmanagementperformanceinrunningacompanybylookingatthelevelofbenefitsobtained ROA Ratio Independent WorkingCapitalturnover Workingcapitalisalwaysoperatingwithinthecompanyaslongasthecompanyconcernedisinbusiness Sales Currentassets-CurrentLiabilities Ratio Liquidity Theratiousedtomeasurethecompany’sabilitytomeetshort-termobligationsthatmustbemeet CurrentRatio Ratio Leverage Theratiousedtomeasurehowmuchthecompanyisfinancedwithdebt DebttoEquityratio Ratio