The effect of financial ratios and company size on dividend policy

Riri Nerviana

doi:10.14414/tiar.v5i1.486

Abstract

The purpose of this research is to find out whether there is an effect of financial ratios on dividend policy, which is proxied by Current Ratio (CR), Debt to Equity Ratio (DER), Total Asset Turnover (TATO), Return on Equity (ROE), Growth of Sales (GS), and Price Earning Ratio (PER), and the Company Size on the Dividend Policy of the company, which is proxied by Dividend Payout Ratio (DPR). The population of this study is manufacturing companies listed in Indonesia Stock Exchange from 2009 to 2013. This study uses purposive sampling method and its subject of 29 companies of the 145 companies that have been observed. The analytical techniques used in this research consist of descriptive statistics test, normality test, multiple linear regressions analysis, and hypothesis test comprising an analysis of the coefficient of determination (R2), model test research (statistical tests F), and a partial test (statistics test of t). The results indicate that only Debt to Equity Ratio (DER), Return on Equity (ROE), and Price Earnings Ratio (PER) that have significant effect on dividend policy.

Highlights

Any company requires substantial funds in running its operations
The facilities provided by the government in helping entrepreneurs to obtain capital from the public can be taken through the capital market with a special exchange known as the Indonesia Stock Exchange or Indonesia Directory Exchange (IDX)
RESEARCH METHOD Sample Classification The population in this study is all manufacturing companies listed in the Indonesia Stock Exchange and publish their financial statements on December 31 fiscal year in the Indonesia Directory Exchange (IDX) and the Indonesian Capital Market Directory (ICMD)

Summary

Introduction

One of the ways to get this fund is by increasing the capital owned and unencumbered by the principal of loan and interest expense on debt repayment obligation. Beside that, they can get by issuing shares to the public. The facilities provided by the government in helping entrepreneurs to obtain capital from the public can be taken through the capital market with a special exchange known as the Indonesia Stock Exchange or IDX. While the Indonesia Stock Exchange is a party that organizes and provides a system and facilities to bring together the offers of buying and selling securities of other parties with the aim of trading

Objectives

Methods

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Conclusion