Performance of Financial Ratios and Hedging towards Firm Value of LQ45 companies in Indonesia

Abstract

This research aims to determine the factors that affect firm value proxy by Tobin Q ratio. The determinants factors used are financial ratios such as current ratio, debt to asset ratio and return on equity along with other factors: tax rate, firm size and hedging dummy. Quantitative method is used and 16 companies with specific criteria under LQ45 that listed in Indonesia Stock Exchange are chosen as sample. The results revealed that current ratio and return on equity have a positive significant affect toward firm value, meanwhile debt to asset and firm size have a negative significant affect toward firm value. Hedging and tax rate have no significant affect toward the firm value. The most significant affect toward firm value from this research is Return on Equity.