Title: ANALYSIS OF THE INFLUENCE OF LIQUIDITY, LEVERAGE, ACTIVITY AND COMPANY SIZE GROWTH ON RETURN ON INVESTMENT IN FOOD AND BEVERAGE COMPANIES THAT GO PUBLIC IN INDONESIA.

Author: Widya

Item Type : Thesis (Thesis)

Affiliations: Master of Management Study Program, Faculty of Economics and Business, Universitas Airlangga , Surabaya, Indonesia

Publisher: Universitas Airlangga

 

Abstract

The prolonged economic crisis since 1997 and welcoming the era of free market competition are two challenges that must be faced by companies in Indonesia, including food and beverage companies. In order to survive in the face of competition, companies must maintain and improve their performance. One performance measure that is widely used in management studies is Return on Investment (ROI). Efforts to maintain and increase ROI can only be made if the variables that influence ROI can be identified precisely. The variables that influence ROI can be studied from the company's internal activities which can be seen from financial ratios such as liquidity ratios, leverage ratios, activity ratios, and growth in company size. Based on this description, the research problem is whether liquidity ratios, leverage ratios, activity ratios, and company size growth have an effect on ROI in normal economic conditions and in crisis economic conditions. This research was conducted on companies belonging to the food and beverage industry that have gone public in Indonesia. The sampling technique used purposive sampling, based on the criteria in judgment sampling, in 14 companies. The data collected were company financial reports during the 1992-1999 period. The analysis model used is multiple regression analysis. This research uses three regression analysis models. Each regression model is based on normal economic data, crisis economic data, and combined economic data. The alternative hypothesis that the independent variable has a significant effect on ROI is tested using the t test for the partial influence test and the F test for the simultaneous influence test. Differences in the stability of the regression structure in normal economic conditions and economic crisis are tested using the Chow test. All forms of testing use a significance probability of 0.05. The research results show that the ratio based on the analysis of combined economic conditions, retained earnings to total assets, which is a proxy for the leverage ratio, has a positive and significant effect on ROI consistently with normal and crisis economic data, while total debt to total assets only has a negative and significant effect on ROI with aggregated economic data. In the analysis of normal economic conditions, retained earnings to total assets have a positive and significant effect on ROI consistently in normal economic conditions and economic crises, while account receivable to total assets, which is a proxy for activity, has a negative and significant effect on ROI with normal economic data, but has an effect. positive and not significant to ROI with crisis economic data. In the analysis of crisis economic conditions, retained earnings to total assets have a positive and significant effect on ROI consistently in normal economic conditions and crisis economic conditions, while the long-term debt to equity variable which is also a proxy for leverage has a positive and significant effect on ROI with crisis economic data, but negative and insignificant effect on ROI with normal economic data. The results of the structural stability test using the Chow test show that the structure of the regression model with normal economic data is not the same or unstable compared to the structure of the regression model with crisis economic data. Differences in the results of regression analysis with different economic data have different implications for managerial policy. Therefore managers cannot use the same strategy for different economic conditions.

 

Keywords: FINANCIAL RATIOS, RETURN ON INVESTMENT, ECONOMIC CONDITIONS.

 

Sources: http://repository.unair.ac.id/34802/