THE EFFECTS OF LIQUIDITY, LEVERAGE EFFICIENCY, AND BOOK VALUE PER SHARE RATIOS TOWARDS PROFITABILITY RATIO OF THE PALM OIL INDUSTRY IN INDONESIA

Abstract

This research’s purpose is to study and analyze the influencing factors and variables of profitability in agriculture, especially palm oil companies in Indonesia from 2015 to 2019. The data for this research is sourced from the published financial reports by eleven selected sample companies listed in the Indonesia Stock Exchange. The method utilized in this research is quantitative analysis, with the instruments using the EViews 10 and Microsoft Excel. The result shows that current ratio, debt to equity ratio, inventory turnover ratio, and book value per share ratio have varying influences on return on assets. Current ratio and book value per share ratio have no influence towards return on assets while debt to equity ratio and inventory turnover ratio have negative influences. The coefficient determination shows that the independent variables have significant effect on profitability of 73.57%. Current ratio, debt to equity ratio, inventory turnover ratio, and book value per share all have significant effect on profitability. The debt to equity ratio has been proven to be the most influential ratio on return on assets compared to other independent variables. The result of this study hopefully able to used by the investors and future researchers to evaluate the companies’ profitability in the future timeframe.