THE RELATIONSHIP OF FINANCIAL RATIOS ANALYSIS TOWARD FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN INDONESIA PERIOD 2003 – 2013

Abstract

The research is performed in order to test the effect of Capital Adequacy Ratio (CAR), Operational Efficiency Ratio (OER), Net Interest Margin (NIM), and Loan to Deposit (LDR) toward financial performance (ROA). Methodology research as the sample used purposive sampling, sample was accured for all Commercial Banks in Indonesia periode 2003-2013. Data analysis by using quantitative research with multiple regression linear and hypotheses test. The sample of this research with 43 samples, time serries. During research period show as variable and data research was normal distributed. Based on test classical assumption test, classic assumption deviation has no founded, this indicate that the available data has fulfill the standard to use multiple regression linear model. The result of research show that all variables have significant relationship toward financial performance simultaneously. variable CAR and LDR have no significant relationship toward financial performance. Variable NIM and BOPO have significant effect toward financial performance. The most significant variable that has relationship toward financial performance is BOPO. Prediction capability from these four variable toward ROA is 52% where 48% is affected from the other variables which was not includes in this research. Banks should maximize revenue / income by minimizing costs in the operations so that the expected profit can be obtained through an effective and efficient mechanism.