Operating Profit and Net Profit Emerge as Key Predictors of Future Cash Flows in Manufacturing Companies

Natalia Sihombing S.Pd Jumat, Agustus 14, 2026
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FORMOSA NEWS

A manufacturing company's ability to project future cash flows is heavily influenced by its operational and net profitability components, whereas gross profit shows no significant impact. This was revealed in a comprehensive study conducted by a research team from the Accounting Study Program, Faculty of Economics at the Methodist University of Indonesia, Medan. Led by Debora Defrianti Siagian alongside co-researchers Dompak Pasaribu, Duma Rahel Situmorang, and Arthur Simanjuntak, the study examined financial statement data of primary consumer goods companies listed on the Indonesia Stock Exchange (IDX) spanning the 2021 to 2024 period. This research is essential for investors and financial analysts seeking to understand which financial indicators most accurately reflect future real cash availability.

The manufacturing sector serves as a vital pillar of the national economy and a core driver of Indonesia's Gross Domestic Product (GDP). Amid supply chain dynamics and post-COVID-19 production cost fluctuations, cash flow acts as an anchor for corporate operational stability. Nevertheless, conventional income statements frequently rely on accrual accounting, where revenues and expenses are recognized when transactions occur rather than when cash is actually received. This condition triggers an urgent need to test the extent to which gross profit, operating profit, and net profit metrics can accurately predict operational cash flows.

To examine this phenomenon, the research team applied a causal descriptive quantitative approach utilizing purposive sampling techniques. Out of 128 primary consumer goods manufacturing companies listed on the IDX, 40 companies met the criteria, yielding 145 observation data units spanning 2021 through 2024. Data analysis was performed using classical assumption tests, descriptive statistics, and multiple linear regression analysis via SPSS software.

Based on partial statistical testing (t-test) and simultaneous testing (F-test), the study uncovered several main findings:

  • Gross Profit: Exhibits a negative and insignificant impact on future cash flow predictions with a significance value of 0.103, indicating that gross profit margins do not automatically reflect cash receipts because they overlook accounts receivable and working capital.
  • Operating Profit: Delivers a positive and highly significant impact on future cash flow projections with a significance value of 0.000, proving that core operational cost efficiency is highly reliable in generating incoming cash.
  • Net Profit: Demonstrates a statistically positive and significant effect on operational cash flows with a significance value of 0.000, signifying that overall asset utilization to generate net profit strongly correlates with corporate liquidity.
  • Simultaneous Effect: Combined together, gross profit, operating profit, and net profit prove to have a substantial impact on cash flow predictions with an Adjusted R Square value of 0.536, meaning that 53.6% of the variation in future cash flows can be explained by these three variables.

These findings provide broad strategic implications for businesses, investors, and public accounting standard policymakers. For corporate management and capital market investors, the analysis shows that reflections of future cash should not rely solely on sales figures or gross profit alone, but must carefully examine operating and net profit efficiencies. This helps stakeholders mitigate liquidity risks and make sound capital allocation decisions amid economic uncertainty.

Author Profiles

  • Debora Defrianti Siagian – Student at the Accounting Study Program, Faculty of Economics, Methodist University of Indonesia, Medan, focusing on financial accounting and capital markets research.
  • Dompak Pasaribu – Lecturer and researcher at the Faculty of Economics, Methodist University of Indonesia, Medan, active in financial management and accounting studies.
  • Duma Rahel Situmorang – Lecturer and researcher at the Faculty of Economics, Methodist University of Indonesia, Medan, specializing in financial statement analysis and auditing.
  • Arthur Simanjuntak – Lecturer and researcher at the Faculty of Economics, Methodist University of Indonesia, Medan, focusing on the development of accounting and taxation sciences.

Research Sources

Natalia Sihombing S.Pd

Diposting oleh Natalia Sihombing S.Pd

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