Proceedings of the 1st Economics and Business International Conference 2017 (EBIC 2017)

Leverage Capability in Controlling Free Cash Flow to Improve Financial Performance

Authors
Nila Tristiarini, Ririh Dian Pratiwi
Corresponding Author
Nila Tristiarini
Available Online January 2018.
DOI
https://doi.org/10.2991/ebic-17.2018.29How to use a DOI?
Keywords
Leverage, Free Cash Flow, Financial Performance
Abstract

Free Cash Flow, in general, being a problem for the company if it is not good in controlling. The manager can use free cash flow for actions that can harm the company. Leverage is a cost that can control the usage of free cash flow for the company's activity, which in turn can improve financial performance. The purpose of this study is to examine the role of leverage in mediating the relationship between free cash flow and financial performance. The research variable consists of Free Cash Flow as the independent variable, the Leverage as the mediator and Financial Performance as the dependent variable. The population of this research is manufacturing companies listed on the Indonesia Stock Exchange periods 2011-2015. The sampling method is purposive sampling with criteria, and the samples that meet the criterion are 70 manufacturing companies. The research model is used Warp PLS 3.0. The results show that free cash flow has an effect on financial performance, and Leverage mediates the relationships between free cash flow and financial performance. This research contribute a novelty of science in the field of management accounting, and has positive implications for companies in determining control strategies of free cash flow through the leverage could improve the financial performance.

Copyright
© 2018, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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Volume Title
Proceedings of the 1st Economics and Business International Conference 2017 (EBIC 2017)
Series
Advances in Economics, Business and Management Research
Publication Date
January 2018
ISBN
978-94-6252-470-5
ISSN
2352-5428
DOI
https://doi.org/10.2991/ebic-17.2018.29How to use a DOI?
Copyright
© 2018, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Cite this article

TY  - CONF
AU  - Nila Tristiarini
AU  - Ririh Dian Pratiwi
PY  - 2018/01
DA  - 2018/01
TI  - Leverage Capability in Controlling Free Cash Flow to Improve Financial Performance
BT  - Proceedings of the 1st Economics and Business International Conference 2017 (EBIC 2017)
PB  - Atlantis Press
SP  - 184
EP  - 188
SN  - 2352-5428
UR  - https://doi.org/10.2991/ebic-17.2018.29
DO  - https://doi.org/10.2991/ebic-17.2018.29
ID  - Tristiarini2018/01
ER  -