THE INFLUENCE OF FINANCIAL RATIO AND FIRM SIZE TOWARD PROFITABILITY OF PULP AND PAPER INDUSTRY IN INDONESIA

Abstract

The research aim is to examine the influence of financial ratio and firm size toward profitability of pulp and paper industry in Indonesia from 2010 to 2019. The research data is taken from the financial reports of seven selected sample companies on the Indonesia Stock Exchange. The research used is a quantitative approach, the technique used multiple linear regression on panel data is the Common Effect Model. Return on asset as dependent variable, while current ratio, debt to asset ratio, working capital turnover, total asset turnover, net profit margin, and firm size use as independent variables. Empirical evidence of this research indicates the coefficient determination of the independent variable had a significant influence on the profitability of 51.71%. The variables Debt to asset ratio, total asset turnover, net profit margin, and firm size have a significant influence to return on asset. In terms of variables, the current ratio has an insignificant influence, and working capital turnover has a negative influence on the return on asset. The total asset turnover and net profit margin variable had the most influence on the return on asset compared to other independent variables. It concludes that the most variables influence to profitability relevant to the company operation that illustrates a company's sustainability business. The implication of this result can be used by investors and companies to evaluate the company's performance.