THE ANALYSIS OF FINANCIAL RATIOS, FIRM SIZE AND INFLATION RATE TOWARD PROFITABILITY OF FOOD AND BEVERAGES MANUFACTURING INDUSTRY IN INDONESIA

Abstract

This research aimed to find out the effect of financial ratios, firm size and inflation rate towards profitability of food and beverages manufacturing industry in Indonesia. There are six variables used in this research consists of independent and dependent variables. Independent variables are current ratio, debt to asset ratio, asset turnover ratio, firm size and inflation rate. Dependent variables is profitability measured by return on asset. This research adapt quantitative research has 65 data observations period 2014-2018. In selecting the observation data, the purposive sampling method and panel data are being used in this research, where the data are collected from Indonesian Stock Exchange. The five independent variables are examined by descriptive statistical analysis, classical assumption test, multiple linear regression and hypothesis testing. The result determined that current ratio and inflation rate are not significant however debt to asset ratio, asset turnover and firm size are significant towards profitability of food and beverages manufacturing industry in Indonesia. The result reveal that the value of adjusted R-squared is 40.68% simultaneously affecting the profitability of return on asset.