DETERMINANT FACTORS OF PROFITABILITY AND EFFICIENCY ANALYSIS (CASE STUDY: AUTOMOTIVE AND COMPONENTS INDUSTRY LISTED ON INDONESIA STOCK EXCHANGE)

Abstract

This study aims to analyze the determinant factors of profitability and efficiency in automotive and components companies 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 method used is a quantitative approach and Data Envelopment Analysis, proceed using the EViews 10 and MaxDEA 8. This study consists of independent variables represent by current ratio, debt to equity ratio, receivables turnover, inventory turnover, working capital turnover, and firm size, towards dependent variable represent by return on assets. Current ratio, receivables turnover, inventory turnover, and working capital have a positive effect on return on assets. Besides, the debt to equity ratio and firm size have a negative effect. The coefficient determination showed that all the independent variables have a significant effect on the profitability of 53.00%. Debt to equity ratio, receivable turnover, and inventory turnover have a significant effect on profitability. Meanwhile, the current ratio, working capital turnover and firm size have no significant effect. The debt to equity ratio is the variable that has the most influence on return on assets. Technical efficiency results implies only PT Goodyear Indonesia Tbk was able to achieve full efficiency in ten years. The overall average score of technical efficiency across all samples for ten years period is 75.3% and there is still an increase in efficiency of 24.7%. The implication of this result can be used by investors and automotive companies to evaluate the company's performance.