THE INFLUENCE OF FINANCIAL RATIO TOWARDS PROFITABILITY (PROPERTY AND REAL ESTATE COMPANIES FOR THE PERIOD 2011 – 2015)

Abstract

Financial ratio is the indicator to understand and take action over a company. The significance of the researcher is determined on the basis of the following parameters: applied aspect and theoretical contribution of the body of the knowledge. The model developed for the study may be used effectively to manage liquidity, leverage, and sales growth for the profitability of the company. The population has been taken from property and real estate sector listed in Indonesia Stock Exchange and from the 58 companies, the researcher have selected seven property and real estate companies of Indonesia and have compiled 5 years data of these companies (2011-2015). Current ratio has negative significant influence towards return on assets because the companies have a lot of inventories which is least liquid in current assets. Debt ratio has negative significant influence towards return on assets; it happens because the companies use more debts to finance its assets. This situation can lead in to decreasing of profitability. Sales growth has positive influence towards return on assets which indicates that the companies will increase their profit buy increasing their revenue. Current ratio, debt ratio, and sales growth are having significant influence toward the return on assets.