Influence of Working Capital Management and Policy to Profitability of Retail Trading Sector in Indonesia

Working Capital (WC) is an important aspect of any firms because of its correlation to risk (liquidity) and return (profitability). This research examines the influence of WC Management and Policy (WCMP) to profitability of 21 listed retail trading sector firms in Indonesia from 2011-2020 using panel data regression. In this research, WC Management (WCM) is measured by Cash Conversion Cycle (CCC) and its components which are Days Sales Outstanding (DSO), Days Inventory Outstanding, and Days Payable Outstanding (DPO); WC Policy is measured current assets divided by total assets or referred to as WC Investment Policy (WCIP) and current liabilities divided by total assets or referred to as WC Financing Policy (WCFP); and profitability is measured by Earnings Before Interest, Tax, Depreciation, and Amortization Margin (EBITDAM). The results show that firms can increase EBITDAM by shortening CCC, primarily through shortening DIO and lengthening DPO. Further, firms may improve EBITDAM by adopting a conservative WC Policy instead of an aggressive one, which means having higher current assets and lower current liabilities with respect to total assets.

COVID-19 and deferred tax reversals

Purpose This paper aims to examine the financial statement impact resulting from the tax depreciation on buildings that was reinstated on 25 March 2020 as part of the New Zealand Government’s coronavirus (COVID-19) tax support package. The COVID-19 pandemic and the tax relief created an accounting response to map the environment to accounting reports, reversing previously recognized deferred tax liabilities and increasing reported income as a result. Design/methodology/approach This is an exploratory and descriptive study to understand the accounting response and impact on companies’ financial statements following a COVID-19 tax relief to support businesses in a dire financial situation as the effects of COVID-19 took hold. Findings First, the accounting response provided the appropriate mapping from the COVID-19 environment to accounting reports. Second, the financial statement impacts are material, especially for companies with extensive holdings of buildings that are held for use. Third, while the accounting relief was immediate, the economic (cash flow) support does not occur until a year later. Research limitations/implications The financial statement impacts are based on a subset of NZX 50 companies with the available information at the time of writing. However, they do not compromise the external validity of the findings because the tax depreciation relief applies to other listed companies, unlisted public and private companies, trust, partnerships and individuals. Practical implications The New Zealand Government could have been more helpful to businesses by allowing an immediate depreciation deduction in the 2020 year as opposed to implementing it from 2021. Further, it could have legislated a backlog depreciation deduction from 2010 – when the depreciation on buildings was disallowed – to 2020. Originality/value This paper documents the evolution of the accounting for deferred taxes when the New Zealand Government withdrew the tax depreciation in 2010, how NZ IAS 12 evolved as a result of that event and now the reversal effect with the reinstatement of the tax depreciation during COVID-19. The paper also blends in the accounting responses and considers whether they are opportunistic or efficient.

Analisis Pengaruh Current Ratio, DER, TATO dan EBITDA Terhadap Kondisi Financial Distress Pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia

This study aims to determine whether the financial ratios that proxied by Current Ratio, Debt to Equity Ratio, Total Asset Turnover, and Earning Before Interest, tax, Depreciation, and Amortization affect to Financial distress in manufacturing companies listed on the IDX from 2013 to 2017. The samples consist of 46 manufacturing companies. The data analysis method used is logistic regression analysis. The results showed that Total Asset Turnover and Earning Before Interest, Tax, Depreciation and Amortization influence partially to Financial Distress. Whereas, Current Ratio and Debt to Equity Ratio has not influence partially to Financial distress. The results showed that Current Ratio (CR), Debt to Equity Ratio (DER), Total Asset Turnover (TATO) and Earning Before Interest, Tax, Depreciation and Amortization (EBITDA) influence simultaneously to Financial Distress on manufacturing companies listed on Indonesia Stock Exchange (IDX) 2013-2017.

Policy Forum: Business Tax Reform in the United States and Canada

The authors examine some of the key features of the US Tax Cuts and Jobs Act (TCJA) and discuss the implications for Canadian corporations and government revenues. They show that the tax advantage that Canada enjoyed prior to the TCJA has declined significantly, in terms of both statutory and effective (marginal and average) tax rates. They discuss the economic effects of possible responses to the TCJA by Canadian governments, including cutting statutory rates and accelerating tax depreciation deductions. Looking ahead, the authors argue that it would be preferable to focus on a more fundamental tax reform based on the taxation of economic rents.

Differences across farm typologies in capital investment during 1996-2013

Purpose The purpose of this paper is to examine the impact of changes in farm economic conditions and macroeconomic trends on US farm capital expenditures between 1996 and 2013. Design/methodology/approach A synthetic panel is constructed from Agricultural Resource Management Survey (ARMS) data. A dynamic system GMM regression model is estimated for farms as a whole and separately within farm typology categories. The use of farm typologies allows for comparison of the relative magnitudes of these estimates across farms by farm sales level and the operator’s primary occupation. Findings Changes in gross farm income levels, tax depreciation rates, and interest rates have a significant impact on crop farm investment, while changes in output prices, net cash farm income levels, tax depreciation rates, and farm specialization levels have significant impacts on livestock farm capital investment. The relative significance and magnitudes of these impacts differ within farm typologies. Significant differences include a greater responsiveness to change in tax policy variables for residential crop farms, greater responsiveness to changes in output prices and debt to asset ratios for intermediate livestock farms, and larger changes in commercial crop and livestock farm investment given equivalent changes in farm sales or the returns to investment. Research limitations/implications These findings are of interest to agricultural economists when constructing farm investment models and employing pseudo panel methods, to those in the agricultural equipment and manufacturing sector when constructing models to manage inventories and plan for production needs across regions and over time, to those involved in drafting tax policy and evaluating the potential impacts of tax changes on agricultural investment, and for those in the agricultural lending sector when designing and executing agricultural capital lending programs. Originality/value This study uniquely identifies differences in the level of investment and the magnitude of investment responsiveness to changes in farm economic conditions and macroeconomic trends given differences in income levels and primary operator occupation. In addition, this study is one of the few which utilizes ARMS data to study farm capital investment. Utilizing ARMS data provides a rich panel data set, covering producers across many different crop production types and regions. Finally, employing pseudo panel construction methods contributes to efforts to effectively employ cross-sectional data and dynamic models to study farm behavior across time.

Amortyzacja jako narzędzie optymalizacji podatkowej

The main goal of people conducting tax policy in an enterprise should be tax optimisation. It is commonly known that entrepreneurs can legally pay lower taxes using the possibilities offered by tax regulations. The use of tax optimisation allows reduction of tax burdens, and hence leads to improvements in financial results. The key, in this case, is to draw up an appropriate analysis and to create, on its basis, a tax strategy that will allow minimization of the debt burdens owned to the treasury, in a legal way. It is also important to minimize the risk associated with the use of certain approaches – the interpretation of existing laws needs to be verified by tax authorities, the judiciary of administrative courts (both WSA [Voivodship Administrative Court] and NSA [Supreme Administrative Court]) and the Constitutional Tribunal. The present article shows, in a practical way, how tax risk managers can take advantage of depreciation as a tax optimisation tool. Depreciation generates tax-deductible costs which are usually equal to depreciation deductions. Tax advantages arising from the use of depreciation are the result of shaping the level of the taxable income. Therefore, the condition for an efficient tax costs management of an enterprise is tax depreciation planning