Title: ANALYSIS OF THE INFLUENCE OF INDUSTRIAL PROFITABILITY, WEIGHTED FINANCIAL LEVERAGE RATIO AND WEIGHTED CAPITAL INTENSITY AND MARKET SHARE ON "ROA" AND "ROE" OF GO-PUBLIC MANUFACTURING COMPANIES IN INDONESIA
Author: Cyrillius Martono
Item Type : Thesis (Thesis)
Affiliations: Master of Management Study Program, Faculty of Economics and Business, Universitas Airlangga , Surabaya, Indonesia
Publisher: Universitas Airlangga
Abstract
The development of companies in the manufacturing industry in Indonesia, both in number and size of business, has implications for increasingly high competition between companies. Efficiency is an important aspect besides effectiveness that companies must pay attention to in order to survive in business competition. Two performance measures that are often considered to measure a company's business efficiency are return on assets (ROA) and return on equity (ROE). In the context of business competition, efficiency considerations no longer only refer to internal efficiency but rather consider external aspects. Therefore, this research places greater emphasis on several ratios which emphasize a combination of internal and external aspects such as: weighted capital intensity ratio as an indicator of barriers to entry; market share which reflects the company's relative position in the market; the company's weighted financial leverage ratio to the industry as a risk indicator; and industry profitability as a general indicator of industry prospects. These four variables are related to external aspects but are very relevant to company efficiency so they are appropriate proxies as determinants of company ROA and ROE. This research uses financial report data from manufacturing companies that went public in Indonesia from 1994-1997 with a total sample per year of 41 companies. The analysis technique used is multiple regression analysis using data pooling. The t test and F test are used to test the research hypothesis. The research results show that; first, three variables, namely industry ROA, weighted capital intensity, and weighted financial leverage are proven to have a significant effect on the company's ROA. Second, three variables, namely industry ROE, weighted financial leverage, and market share are proven to have a significant effect on ROE. Third, based on the R2 value, the results of the ROE regression analysis are more robust than the results of the ROA regression analysis. Fourth, industry profitability is proven to be superior in explaining ROA, while the superior variable in explaining ROE is the weighted financial leverage ratio
Keywords: RETURN ON ASSETS, RETURN ON EQUITY, INDUSTRY RATIO.
Sources: http://repository.unair.ac.id/34822/
