THE INFLUENCE OF INVENTORY VALUATION METHOD, COMPANY SIZE AND CAPITAL INTENSITY ON PRICE EARNINGS RATIO (A CASE STUDY OF MANUFACTURING COMPANIES LISTED IN IDX)

Abstract

This research is purposed to obtain empirical evidence about the influence of inventory valuation method, company size and capital intensity on price earnings ratio. It used secondary data. Sample of this research is manufacturing companies listed in Indonesia Stock Exchange from 2010 – 2012 that have certain criteria stated. The research examines three independent variables such as inventory valuation method, company size, capital intensity and a dependent variables which is price earnings ratio. Where it is examined using multiple regression test. T-test and F-test used in order to examine the hypothesis testing. Obtained the results from multiple regression test which shows that all independent variables of inventory valuation method, company size and capital intensity influence price earnings ratio. Company size has the positive significant influence on price earnings ratio. While inventory valuation method and capital intensity have the negative and insignificant influence on price earnings ratio. Other result states that Inventory valuation method between FIFO and weighted average have no diferences in influencing price earnings ratio. For further research, the researchers may identify other variables that have the possibility in influencing price earnings ratio. Because of variables in this research come from internal of companies, the researchers may identify the external factors. Then, the researcher preferably expand the period of research and data collection within 5 years for example and use both primary data and secondary data.