THE INFLUENCE OF DEBT AND PROFITABILITY RATIOS ON THE STOCK RETURN OF COSMETICS COMPANIES

Abstract

The sales growth of cosmetics companies increase from year to year mainly from the sales of 3 well-known cosmetics companies in Indonesia, which are Mandom Indonesia Tbk, Mustika Ratu Tbk, and Martina Berto Tbk. However, the stock return of these cosmetics companies shows a declining trend despite their sales growth therefore this study wants to find out factors that affect it. The theoretical framework focused on debt to equity ratio (X1), return on equity (X2), and earnings per share (X3) as the independent variables and stock return (Y) as the dependent variable. The research methodology uses quantitative method where the data taken for the analysis is secondary. Non-probability sampling which is purposive sampling as the tool to choose the sample. The data is taken from 2012-2015 quarterly financial report from 3 cosmetics companies which listed in Indonesia Stock Exchange (IDX) and for the stock price which is taken from Yahoo Finance. The analysis shows that from three independent variables, ROE has positive significant on stock return, EPS has negative significant on stock return, and DER has positive but not significant on stock return. DER, ROE, and EPS simultaneously have a significant relationship on stock return. In summary, ROE is the variable that has the strongest influence on the stock return of cosmetics companies.