This study clarified the relationship between profitability and liquidity by
concentrating on how the cash ratio affects operating profit. The purpose of this study,
which uses Pearson's correlation analysis technique and R-Square analysis technique,
is to determine and investigate the impact of the cash ratio on the company's operating
profit in greater detail. It is hoped that this study will further shed light on the
relationship between liquidity management and the operational performance of
companies. The research relies on PT Pupuk Indonesia's annual financial data from
2019 to 2023 is used as the basis for the research. Operating profit is a dependent
variable, and cash ratio is an independent variable. The analysis's findings indicate a
strong relationship between operating profit and PT Pupuk Indonesia's cash ratio.
According to the results of the R Squrared determination test, the cash ratio can
explain as much as 81.7% of the variation in operating profit. In this study, PT Pupuk
Indonesia's cash ratio and operating profit were found to be significantly positively
correlated. These results show that the improvement in the company's operating
performance can be attributed to increased liquidity. Nevertheless, the management
of PT Pupuk Indonesia must take into account other elements that can impact the
company's profitability, such as market conditions, marketing tactics, and cost-
effectiveness, to create a better long-term strategic plan.

Link Publikasi : https://irdhjournals.com/ijmb/article/view/55/69