Effect of Profitability, Company Size, and Growth of Sales on Capital Structure

Abstract

This study aims to determine and empirically test the effect of profitability, company size, and sales growth toward the capital structure. Capital structure is an essential issue for any company due to the good and bad capital structure will have a direct effect on the financial condition of companies. The data in this study are secondary data in the form of financial statements of companies in the consumer goods industry sector listed at IDX and related company sites. The population in this study were 57 companies in the consumer goods industry sector listed at IDX. The sampling technique used in this study is purposive sampling and there were 39 companies used as research samples. The data analysis technique used in this study is multiple linear regression analysis. The data obtained were processed using a computer with SPSS 22 program. Based on the analysis and hypothesis testing, the results show that profitability and company size have a significant effect on the capital structure of companies in the consumer goods industry sector listed at IDX in the period 2016 – 2018. Meanwhile, sales growth has no significant effect on the capital structure of companies in the consumer goods industry sector listed at IDX for the period 2016 - 2018.