IMPACT OF LIQUIDITY MANAGEMENT ON PROFITABILITY: A CASE STUDY OF PT BANK DANAMON INDONESIA PERIOD 2006 – 2013

Abstract

This paper‟s objective is to study the impact of current ratio, loan to deposit ratio and quick ratio on return on asset and return on equity in PT Bank Danamon Indonesia. Performance variables in analysis of covariance models include Current Ratio (CR), Loan to Deposit Ratio (LDR) and Quick Ratio (QR) as liquidity instrument to Return on Equity (ROE) and Return on Asset (ROA) as profitability measurement. The data used in this study is secondary data was obtained from the financial report of PT Bank Danamon Indonesia through the website which is quarterly data from 1st Quarter of 2006 to 3nd Quarter of 2013. In this study, it was found only LDR that significantly affected ROA at level 10% while CR and LDR are significantly affect ROE on level 10%. The study also revealed that there is a negative relationship between current ratio (CR) and quick ratio (QR) toward return on asset (ROA) and return on equity (ROE).