THE INFLUENCE OF FINANCIAL RATIOS TOWARDS FIRM PERFORMANCE OF FOOD AND BEVERAGE COMPANIES IN INDONESIA

Abstract

This study aims to examine the impact of financial ratios on company performance, with a focus on profitability, with an emphasis on Indonesian food and beverage companies. This study uses quantitative methods and multiple regression analysis to analyse variables. Random effects model is selected as the model and use EViews 10 as the research tool. Data of this research taken from financial report which published annually. The sample of the study is 9 selected food and beverage companies that meet the criteria and are registered on the Indonesian stock exchange during 2013-2019. The research result discloses that short-term debt and long-term debt have a negatively significant impact on profitability. At the same time, cash flow from operating activities, sales growth and firm size have a positive and significant effect. Compared with other independent variables, sales growth is the variable that has the greatest influence on the return on assets. The determination of the coefficient shows that the independent variables can simultaneously explain 52.67% of the return on assets. Managers of the company and investors can use this research result as a reference in evaluating the firm performance.