THE ANALYZING THE EFFECT OF CAPITAL STRUCTURE TOWARDS PROFITABILITY (CASE FOOD AND BEVERAGES COMPANIES 2010-2012 LISTED IN IDX)

Abstract

The purpose of this study was to analyze the effect of capital structure towards company profitability by conducting a case study on food and beverages companies listed on the IDX for the period of 2010 to 2012, is the capital structure in a company is good enough or not yet. Capital structure represented by Debt to Equity Ratio, Debt Asset Ratio, Long-term Debt to Ratio and company profitability represented the Return on Equity. The research is using quantitative method, and the sample is taken from food and beverages industries in Indonesia listed in IDX from period 2010 until 2012. In the classical assumption test results showed that there were no irregularities classical assumptions, it indicates that the available data are qualified to use a simple linear regression model. The results showed Debt to Equity Ratio has no significant influence on the performance of the company and Debt to Asset Ratio and Long-term Debt to Equity Ratio has significant effect to Return on Equity. And simultaneously all the variables have significant influence toward Return on Equity.