The Effect of Cash Flow on Financial Performance of LQ45 Companies in Indonesia

Muhammad Abdurrahman Asyari; Isni Andriana; Kemas Muhammad Husni Thamrin; Taufik

doi:10.63922/ijebir.v5i03.3909

Muhammad Abdurrahman Asyari Department of Management, Faculty of Economics, Sriwijaya University, Indonesia.
Isni Andriana Department of Management, Faculty of Economics, Sriwijaya University, Indonesia.
Kemas Muhammad Husni Thamrin Department of Management, Faculty of Economics, Sriwijaya University, Indonesia.
Taufik Department of Management, Faculty of Economics, Sriwijaya University, Indonesia.

DOI: https://doi.org/10.63922/ijebir.v5i03.3909

Keywords: Operating Cash Flow, Investing Cash Flow, Financing Cash Flow, Financial Performance, LQ45 Index

Abstract

This study aims to analyze the influence of operating cash flow (CFO), investing cash flow (CFI), and financing cash flow (CFF) on financial performance in companies listed in the LQ45 Index on the Indonesia Stock Exchange for the 2019–2024 period. Financial performance in this study is proxied through profitability measured using Return on Assets (ROA) and liquidity measured using Current Ratio (CR). The research uses a quantitative approach with secondary data obtained from the company's financial statements through the official website of the Indonesia Stock Exchange. The data analysis technique was carried out using panel data regression with the help of the E-Views application. The results of the study show that operating cash flow has a positive and significant effect on profitability and liquidity. Investing cash flow has no significant effect on profitability or liquidity. Meanwhile, financing cash flow has a negative and significant effect on profitability and liquidity. These findings show that the effectiveness of operating cash flow management has an important role in improving a company's financial performance, while non-optimal funding decisions have the potential to reduce the company's financial performance.

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