THE EFFECT OF FINANCIAL RATIO TOWARD STOCK PRICE IN INDONESIA CONSTRUCTION COMPANIES

Abstract

Construction companies will grow rapidly in the future. This makes many investors interested in this sector. Also stock market in Indonesia is growing rapidly and because of this, many companies want to go public and be listed in stock market with the aim of getting more money through public ownership. Stock price is an unpredictable movement and could change every single time. From this research, investors can find out what financial ratios must be analyzed before making investment decisions and also the company can find out what ratios affect the stock price so that the company can pay attention to that ratio. The aim of this study is to analyze the effect of financial ratio toward stock price in Indonesia construction company period 2015 – 2020. This study is a quantitative research that used data from nine construction companies in period 2015 - 2020. There are five independent variables used in this research. They are Net Profit Margin, Current Ratio, Debt to Equity Ratio, Total Asset Turnover, Price to Book Value and the dependent variable which is stock price. The data analyze by multiple regression analysis using statistical software. The result of this study is only the price to book value influences the stock price. While other variables, which are NPM, CR, DER, and TAT do not influence the stock price in construction companies. So, the company must to pay attention to PBV because investors can use this ratio to control the future stock price of a company. Meanwhile, NPM, CR, DER, TATO has no effect toward stock prices, which means all that variable does not affect stock price movements.