Abstract
Dividends are a significant factor in investors' investment interests, so that dividend policy is a critical factor for companies to retain their shareholders. On this purposes, the companies must improve financial performance, especially activity ratios, liquidity ratios, and profitability ratios in this condition. The consumer goods industry sector is one of the industries that play a significant role in the capital market as they have rapid business competition. Until May 2020, the performance condition of companies in the consumer goods industry was experiencing less than optimal conditions as the manufacturing sector weakened at 22.0% due to the weakening of Indonesia's manufacturing Purchasing Managers' Index (PMI). The condition indicates that the impact of a decrease in the company's liquidity performance is a decrease in demand for manufactured goods which gives results in a decrease in profitability performance, and a less than optimal turnover of company assets in the consumer goods industry sector. This study uses manufacturing companies in the consumer goods industry listed on the Indonesia Stock Exchange from 2015 to 2019 as a sample. Multiple regression analysis results show that return on investment has a positive and significant effect on the dividend payout ratio. This result implies that the profitability ratio is a positive signal for investors in the capital market regarding the company's dividend policy.
Highlights
Manufacturing companies in the consumer goods industry sector are one of the industries that significantly influence trade dynamics in the capital market (Arlita et al, 2019)
This study aims to determine the effect of activity ratios, liquidity ratios, and profitability ratios on dividend policy in public companies, especially in the consumer goods industry sector listed on the Indonesia Stock Exchange (IDX), to provide consideration for management policies and the manufacturing industry business sector related to harmonization of company operations with the interests of stockholders
The analysis shows that Current Ratio (CR) has an average value of 2.6501 with a minimum value of 0.51, a maximum value of 8.64, and a standard deviation of 1.79019
Summary
Manufacturing companies in the consumer goods industry sector are one of the industries that significantly influence trade dynamics in the capital market (Arlita et al, 2019). The company's business development requires a large enough amount of working capital to allow internal funds to be insufficient for working capital needs (Pontoh, 2018). This causes a company to attract investors to invest in its business to increase its working capital (Dewi et al, 2017). The performance condition of companies in the consumer goods industry until May 2020 was experiencing less than optimal conditions as the manufacturing sector weakened at
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