AN ASSESSMENT OF CURRENT RATIO, DEBT TO EQUITY RATIO, RETURN ON ASSET, RETURN ON EQUITY AND GROSS PROFIT MARGIN AS A PREDICTOR OF STOCK PRICE’S BEHAVIOUR IN CONSUMER GOODS COMPANY LISTED IN INDONESIA STOCK EXCHANGE

Abstract

The purpose of this research is to assess the effectiveness of financial ratios as tools to predict Consumer Goods Companies stock’s performance. The financial ratios used in this study were current ratio, debt to equity ratio, return on asset, return on equity, and gross profit margin. A regression analysis tested the correlation between the average financial ratio and the average market capitalization for 3 years of the companies in the sample. The statistical test used was a multiple regression analysis. The result shows that current ratio has positive and insignificant influence on the stock price. Debt to equity ratio has positive and significant influence on the stock price. Return on asset has positive and significant influence on the stock price. Return on equity has negative and insignificant influence on the stock. Gross profit margin has negative and insignificant influence on the stock price. Simultaneous current ratio, debt to equity ratio, return on asset, return on equity, and gross profit margin influence the stock prices significantly.