The Influence of Financial Ratios on Share Prices (Case Studies on Property &amp; Realestate Companies in the Construction and Building Sub-Sector Listed on the Indonesia Stock Exchange)

Herlina Dwiyanthi ,Neneng Faridatul Husna ,Wili Handayani

doi:10.11594/nstp.2021.1046

Abstract

This study aims to determine the effect of financial ratios on stock prices in property real estate companies in the construction and building sector listed on the Indonesia Stock Exchange (IDX) for the 2016-2019 period. By using the ratio of profitability, liquidity, and solvency. The financial ratios studied are Current Ratio (CR), Return on Assets (ROA), Return on Equity (ROE), Net Profit Margin (NPM), and Operating Profit Margin (OPM), as independent variables and stock prices as the dependent variable. In this study, researchers used as many as 8 sample companies. The data used are quantitative data on the annual financial statements of companies listed on the Indonesian stock exchange (BEI). This study uses multiple linear regression analysis using the SPSS program.

Highlights

In this era of globalization where there are many opportunities for people to invest, not a few people make this investment an alternative way of investing in the future
This study examines whether Current Ratio (CR), Return on Asset (ROA), Return on Equity (ROE), Net Profit Margin (NPM), and Operating Profit Margin (OPM) can affect stock prices in companies
The results of hypothesis testing using multiple linear regression with five independent variables (CR, ROA, ROE, NPM, and OPM) and one dependent variable (Stock Price), indicate that: 1. The current ratio (CR) has no significant effect on stock prices. This is consistent with research conducted by several previous researchers who in their research showed that CR has no significant effect on stock prices

Summary

Introduction

In this era of globalization where there are many opportunities for people to invest, not a few people make this investment an alternative way of investing in the future. Investing in stocks in the capital market is an alternative that investors can invest in investing their funds in financial assets. The capital market in Indonesia has encouraged go public companies to sell part of their shares to the public. The shares of a company can attract many investors if the company can achieve good performance. To assess the financial performance and achievements of a company, an investor needs financial statement analysis as a consideration in determining stock prices. Financial statement analysis requires several benchmarks in assessing the company's financial condition. The objective of investors investing in stocks in the capital market is to find the highest return on investment (return) in the future

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Conclusion