Debt Equity Ratio Research Articles

IMPACT OF DEBT FINANCING ON FINANCIAL PERFORMANCE OF FIRMS: A Systematic Literature Review

Debt financing is a major aspect of capital structure which represents the borrowed portion of funds hoisted through external funding. Debt plays a noteworthy role in persuading the fiscal performance of any organization because it creates a continuous pressure of making interest payment along with principal amount. Present study aims to discover the efficacy of debt financing on financial performance of the organization and it’s purely depends upon the findings of previous related literatures. For this purpose, Web of Science and SCOPUS database has been taken as base to collect the required information while it includes documents of all time spans available, from 1985 to 2022, in database. After gathering the data, a systematic literature review has been performed and encountered that debt indicators have a significant negative impact on indicators of financial performance. Long-term debt, total debt, debt-equity ratio has significant but negative impact on firm performance which support the upshots of ‘pecking-order’ theory. Short-term debt has mixed effect on performance indicators. Control variables have also been evaluated like age, size, tangibility, liquidity, corporate tax, growth opportunities etc. and discovered that size, growth and liquidity portray a positive impression while age and tangibility have negative efficacy on monetary performance of the concern. Also, the study can be used as a ground to identify the literature gap of the concept and can be used in future for further research.

Adjustment Speed of the Capital Structure in the Telecommunication Industry in Indonesia Year 2013-2018

In 2013, telecommunications companies in Indonesia relied significantly on debt loans as a source of funding, with an average capital structure of -11.51%. The highest increase was observed in 2015, reaching an impressive 99.20%. Given this fluctuation, it becomes imperative to conduct research focusing on the adjustment speed of the capital structure in telecommunications companies during the period from 2013 to 2018. The research findings indicate varying rates of adjustment in capital structure, particularly in terms of Debt Equity Ratio (DER). The fastest adjustment was seen in XL Axiata at -19.14% and Indosat at -1.62%, while Telkom Indonesia exhibited a slower adjustment rate at 36.72%, and Smartfren Telecom had the slowest adjustment at 51.96%. Similarly, when considering the Debt Asset Ratio (DAR), XL Axiata displayed the swiftest adjustment at -17.63%, followed by Telkom Indonesia at -9.05%, and Indosat at -3.11%. In contrast, Smartfren Telecom had the most gradual adjustment, with a notable value of 71.70%. These findings underscore the dynamic nature of capital structure in the Indonesian telecommunications sector during the specified period. The varying speeds of adjustment in debt ratios reflect the strategic financial decisions made by these companies in response to market conditions and internal factors. Further analysis is essential to comprehend the factors influencing these diverse adjustment rates and their implications for the industry's financial stability.

Correlation Study between Debt-Equity Ratio and Asset Returns with Relative Market Value to Book Value in the Indonesian Mining Industry (2020-2022)

This research aims to analyze the influence of Debt to Equity Ratio and Return on Asset on Price to Book Value within the Indonesian mining industry for the years 2020-2022. Utilizing a quantitative methodology and an associative approach, the study was carried out from April to June 2023. From a population of 80 mining companies listed on the Indonesia Stock Exchange, 25 were selected as samples through purposive sampling Findings suggest that the Debt to Equity Ratio does not significantly impact Price to Book Value. However, Return on Asset has a notable influence. Additionally, both variables collectively have an effect on Price to Book Value.

Вплив співвідношення балансової вартості, прибутку на акцію та співвідношення боргового і власного капіталу на ціни акцій компаній на прикладі компаній, що котируються на фондовій біржі Індонезії

Listed on the Indonesia Stock Exchange. Scientific and methodical article. This research is a study conducted to determine the effect of Price Book To Value, Earning Per Share and Debt Equity Ratio on the Share Price of Property, Real Estate and Building Construction Companies Listed on the Indonesia Stock Exchange for the 2018-2021 Period. This study uses a quantitative approach with secondary data sources obtained from the company's financial statements published at www.idx.co.id. The sampling technique in this study is to use purposive sampling technique, with a total of 10 companies with data for 4 years so that it has a total sample of 40 data. The results of this study indicate that Price Book To Value, Earning Per Share, Debt Equity Ratio has a significant positive effect on stock prices in Property, Construction and Real Estate companies listed on the IDX.

Pengaruh Earnings Per Share, Return On Equity, Debt Equity Ratio Terhadap Return Saham (Sudi pada Perusahaan LQ45 yang terdaftar di BEI periode 2019-2021)

This study aims to examine the effect of Earnings Per Share, Return On Equity, Debt Equity Ratio on Stock Returns. The statistical method used uses multiple regression analysis. The type of data used in this research is secondary data whose data source was obtained from the Indonesia Stock Exchange for the 2019-2021 period. The population in this study were 18 companies that entered the LQ45 period 2019 -2021 on the IDX. The results of this study indicate that Earnings Per Share has an effect on Stock Returns, Return On Equity has an effect on Stock Returns, while Debt Equity Ratio has no effect on Stock Returns. But Earning Per Share, Return On Equity and Debt Equity Ratio simultaneously or jointly affect Stock Returns.

Debt-Equity Variations and Determinants: Empirical Study of Quoted Firms in Nigeria

This study investigates debt-equity variations and determinants with reference to quoted firms in Nigeria for the period 2009 to 2018. The major objective of the study is to ascertain the factors that influence the change in debt-equity. The data used is from fifteen listed firms in Nigeria, Preliminary analysis showed that income volatility, interest payment, asset tangibility, firm size and non-debt tax shield have high correlation with change in debt-equity ratio. All the independent variables are positively related to change in debt-equity ratio except income volatility. The panel unit root test showed that the data were all stationary at first differencing. The major findings indicated a positive and significant relationship between asset tangibility, firm size and change in debt-equity ratio of the selected firms. Interest payment and non-debt tax shield increased change in debt-equity ratio but insignificant, while income volatility showed a negative and insignificant effect on change in debt-equity ratio. The study recommends the need for quoted firms in Nigeria to provide quality management in various areas of the businesses activities to ensure the stability of income, without which can cause numerous business.

The Effect of Debt To Asset Ratio, Debt To Equity Ratio To Nett Profit Margin (Case Study of PT Waskita Karya (Persero) Tbk In 2018-2022)

The purpose of this study is to see and determine the effect between debt asset ratio and debt equity ratio on net profit margin both partially and simultaneously. This research is a quantitative research with secondary data obtained from the Indonesia Stock Exchange, in the period 2018-2022. Sample selection, the method used is purposive sampling, Data collection techniques used in this study are secondary data, data analysis techniques using the SPSS Version 24 statistical program. The test results are partially obtained, namely: The variable Debt to Asset Ratio (X1) does not have a partially significant effect on Net profit Margin (Y) because the significance level value is greater than 0.005. The variable Debt to Equity Ratio (X2) has a significant effect partially because the significant value is smaller than 0.005, the test results simultaneously obtained the result of the significance value of 0.034 which is smaller than 0.005, it can be concluded that both variables Debt to Asset Ratio (X1) and Variable Debt to Equity Ratio (X2) have a positive and significant influence on the dependent variable, namely Nett profit Margin (Y)

PENGARUH GOOD CORPORATE GOVERNANCE DAN KINERJA PERUSAHAAN TERHADAP FINANCIAL DISTRESS

The objective of this research is to determine how company performance and good corporate governance (GCG) impact financial distress in manufacturing companies listed on the Indonesia Stock Exchange from 2019 to 2021. This study employs a quantitative approach. The subjects of this research are manufacturing companies listed on the Indonesia Stock Exchange. Multiple linear regression analysis is used. The research findings indicate that GCG, measured through the audit committee, independent board of commissioners, and board of directors, does not have an impact on financial distress. Conversely, company performance, measured by Return on Assets (ROA) and Debt Equity Ratio (DER), does impact financial distress. This might be due to the financial factors being more easily measurable and directly assessable when predicting a company's bankruptcy. Keywords: Good Corporate Governance, Firm Performance, Financial distress

Financial Performance and Share Price: Evidence from Manufacturing Firms Before and During the Covid-19 Pandemic

The study aims to analyze the effect of financial performance on stock prices. Financial performance is described through five financial ratios as independent variables, namely current ratio, debt equity ratio, return on assets, return on equity and asset turnover, with stock price as the dependent variable. 436 manufacturing companies listed on the Indonesia Stock Exchange (IDX) were used as a sample, which is the 2019-2020 research year (the period before and during the pandemic). Data analysis using multiple linear regression. The results showed the current ratio and return on assets have an effect on stock prices. In addition, in separate tests based on periods, only current ratio had a negative effect on the pre-pandemic period, and return on assets had a positive effect during the pandemic on stock prices. These findings contribute empirically by adding to the literature regarding financial ratios that affect stock prices before and during a pandemic.

A Study of Unjha Market Yard (APMC): Financial Performance

The growth of farmers is greatly aided by APMCs. The actions of the farmers in terms of selling and purchasing might be significantly impacted by APMC. The major activity to enhance the trade cycle is carried out by APMC Unjha, one of the most active APMCs in Gujarat and India. It is located in Gujarat state's Mehsana district. It belongs to a charity. In this study, we examine Unjah APMC's balance sheet and profit and loss statement. Different ratios can be utilised for financial performance analysis and generated on the basis of translating APMC terminology into corporate terms. The financial performance of APMC Unjha is gauged using a variety of factors, including the net profit ratio, current ratio, debt equity ratio, different income and expenditure ratios, and fixed asset turnover ratios. This study's primary goal is to determine the financial status using a ratio analysis.

Good Corporate Governance Effectiveness Mechanism, Special Relationship Transactions, and Leverage on Tax Aggressiveness

This study examines how effective good corporate governance, control of related party transactions, and leverage are in reducing tax aggressiveness. The research methodology involves cross-sectional and time-series analysis of manufacturing companies listed on the IDX from 2017-2021. Through purposive sampling, 200 observational samples were collected and tested using E-views 12, which produced a random effect model as the best regression model. The findings indicate that good corporate governance with institutional ownership proxies, audit committee activities, and the proportion of independent commissioners did not significantly reduce tax aggressiveness. Leverage with debt-equity ratio proxies also did not demonstrate a significant effect. However, related party transactions had a significant effect in increasing management opportunities to carry out tax aggressiveness. If good corporate governance implementation is not maximized and there is unfairness in related party transactions, it may indicate aggressive tax avoidance.

Determinants of stock price performance in the Indonesian basic industry

Purpose — This study aimed to identify the determinant factors of the stock price performance, proxied by price earnings ratio, in the basic industry (IDXBASIC) and the causal relationship between them.Method — Data were collected from the Indonesia Stock Exchange for a period of five years, spanning from 2017 to 2021. The purposive sampling method was chosen, and a total of sixty firms were selected for the final sample of this study. This study adopts generalized least squares of panel data analysis using STATA version 13 software.Result — The results revealed that return on equity, debt-equity ratio, price-to-book value, earnings growth, and dividend payout significantly impact the price-earnings ratio (PE) and thus become significant determinants of the price-earnings ratio (PE). On the other hand, market return and firm size showed no significant influence on the price-earnings ratio.Contribution — This study's academic contribution is its specific focus on the Indonesia Basic Industry (IDXBASIC) and exploration of the factors influencing the Price-Earning Ratio (P/E ratio) within this sector, filling a significant gap in the literature and offering valuable insights for investors, policymakers, and market participants.

The Impact of Current Ratio, Total Asset Turnover, Debt-Equity Ratio, Return on Equity, And Price Earning Ratio Toward Stock Return

This study aims to examine the effect of Current ratio (CR), Total asset turnover (TATO), Debt equity ratio (DER), Return on equity (ROE), and Price earning ratio (PER) on stock returns in pharmaceutical sub-sector companies listed in Indonesia Stock Exchange (IDX). The population of this research is 10 pharmaceutical companies that publish annual reports on the websites of each company in 2015 – 2020 and the sampling method of pharmaceutical companies use the purposive sampling method and based on predetermined criteria, a sample of 7 companies is obtained. In this study, the analytical method used is the panel data regression analysis method. The results showed that the Current ratio (CR), Total asset turnover (TATO) and Debt equity ratio (DER) had no effect while Return on equity (ROE) and Price earning ratio (PER had an effect on Stock Return in Pharmaceutical Sub-Sector Companies listed in IDX Period 2015 – 2020.

Fundamental and Technical Analysis of IPO Company Stocks in 2014

This study aims to identify and analyze the stocks of companies that went IPO in 2014 using fundamental and technical analysis with the variables Return on Assets (ROA), Return on Equity (ROE), Earnings per Share (EPS), Debt Equity Ratio (DER), Price Earning Ratio (PER), Price Book Value (PBV) and Trading Volume (VP). The approach used in this research is quantitative, with a purposive sampling data collection technique and a total sample size of 126. The data analysis technique used is panel data regression with a random effect model. The results showed that Return on Assets (ROA), Return on Equity (ROE), Debt Equity Ratio (DER), Price Earning Ratio (PER), Price Book Value (PBV), and Trading Volume (VP) had no effect, and were not significant on the IPO share price in 2014, while Earnings per Share (EPS) had a positive and significant influence on the IPO share price in 2014. The variables jointly affected the IPO share price in 2014.

The Impact of Top Management Education from Reputable Universities on Corporate Capital Structure: Evidence from Indonesia

This article aims to analyse the relationship between the chief executive and financial officer (CEO and CFO) from reputable universities and capital structure. We use least-square regression using 3,003 firm-year observations of companies listed in Indonesia from all industries except the financial sector from 2010 to 2019. Consistent with the hypothesis development, the results show that CEOs and CFO from reputable universities have a significant positive relation to the debt-equity ratio. The same result is also shown in the robust test using coarsened exact matching (CEM) and Heckman’s two-stage model. We also document that in a high-growth industry, CEO reputation plays an important effect on capital structure, meanwhile in a low growth industry, CFO does. Interestingly, only the company who has low-tech industry shows a significant education reputation on capital structure. We also separate the sample using education levels, undergraduate and postgraduate. These findings will interest policymakers and companies when recruiting top managers to consider their educational background because it influences capital structure decisions. This study provides a theoretical contribution to the literature on the relationship between top management educational background and capital structure in Indonesia.

Determinan Nilai Perusahaan Dengan Struktur Modal Sebagai Variabel Moderating Pada Perusahaan Industri Sektor Consumer Goods Bursa Efek Indonesia

This study aims to examine and analyze the determinants of firm value with capital structure as a moderating variable, how do the effects of Return On Assets (ROA), Debt Equity Ratio (DER), Debt Asset Ratio (DAR), DAR can moderate ROA and DER in influencing firm value . This research approach employs a descriptive methodology, which involves describing and analyzing research findings without drawing broader conclusions. The population of this study are manufacturing companies listed on the Indonesia Stock Exchange (IDX) with the consumer goods sector. The sample was determined using purposive sampling method. The analytical method used in this study is multiple regression with the SPSS version 25 program and hypothesis testing is carried out using the moderate regression analysis (MRA) method. The results showed that partially ROE had a positive effect on firm value with a significance value of 0.000, while DER had no negative effect on firm value with a significance value of 0.803. DAR has no effect on firm value with a significance value of 0.156 and capital structure (DAR) can strengthen profitability (ROE) in influencing firm value with a significance value of 0.005. Meanwhile, capital structure (DAR) cannot strengthen Solvability (DER) in influencing firm value. Simultaneously ROA, DER, DAR can affect company value in consumer goods listed on the Indonesia Stock Exchange. The limitations of this study are the limitations of the processed data and the limitations of the variables used. Hopefully this research can be useful for the community, especially investors or investors as a material consideration in investing in companies
 
 Keywords: ROA, DER, DAR, ROE

THE EFFECT OF PROFITABILITY, LIQUIDITY, LEVERAGE, SALES GROWTH ON FINANCIAL DISTRESS IN CONSUMER AND NON-CONSUMER CYCLICALS COMPANIES LISTED ON THE IDX DURING THE 2019-2021

The ability of a company to compete is determined by the company’s performance. If there is a lack of effectiveness in the company’s performance, then company leaders can take the right action to ensure that things become more efficient. Moreover, performance measurement is closely related to the company’s financial condition. Every company should create and use financial reports in the process of managing the company’s finances. Therefore, this research is needed to find out the effect of profitability, liquidity, leverage, sales growth on financial distress in consumer and non-consumer cyclicals companies listed on the IDX during the 2019-2021. The sampling method used in this research is nonprobability sampling by applying purposive sampling technique. The sample used in this research consists of trading companies listed on the Indonesia Stock Exchange (IDX) during the 2019-2021 that are engaged in buying and selling activities without production. The results of this research indicate that (1) the profitability ratio measured using Return on Asset has a positive effect on financial distress; (2) the profitability ratio measured using Return on Equity has a negative effect on financial distress; (3) the liquidity ratio measured using the Current Ratio has no effect on financial distress; (4) the leverage ratio measured using the Debt Equity Ratio has an effect on financial distress; and (5) the sales growth ratio has no effect on financial distress in trading sector companies listed on the IDX during 2019-2021.

Maximizing Value - A Look Back at FGV Holdings Berhad

This paper explores a number of relevant capital structure theories that may help explain the real market occurrence. The debt-equity ratio is commonly utilized as a variable of interest by many to evaluate the viability of company’s capital structure. Based on Modigliani-Miller Trade-Off theory (1958), their major goal is to examine how firm-specific capital structure determinants may impact the company's capital structure choice. It is essential to comprehend how firm-specific factors could exert a direct impact on a company's share price in both the short and long run. In the case of FGV Holdings Berhad, its capital structure composition has shifted from equity-weighted to debt due to FGV's improved cash flow situations, allowing them to secure wider options of financing from the capital markets. As a result, the company's total debt to total assets ratio has risen dramatically to 76.4 percent. However, it is vital to note that FGV's debt interest payments are not adequately supported by profits before interest and tax (EBIT). Debt financing invariably requires interest payments, regardless of whether it is provided through the bond or banking markets. The net result could jeopardize the company’s value through declining share price. The Trade-off theory is seen ideal in explaining the financial conditions in FGV. It is important to balance out the benefits of debt against the costs of debt at all times. Overall, FGV's top management should consider conducting a thorough review on its entire capital structure since the debt levels have climbed dramatically since 2014, along with a declining cash level in mid-2014.

Return on Equity, Cash Ratio & Debt Equity Ratio Affect Stock Returns in the Banking Industry Listed on the IDX With Non-Performing Loans as a Moderating Variable

This study aims to determine the effect of return on equity, cash ratio and debt to equity ratio on stock returns in the banking industry listed on the IDX with non-performing loans as a moderating variable. The research design used is the simple design method. The population used in this study are banking companies listed on the Indonesia stock exchange for the 2016-2021 period, with a total sample of 26 companies using 156 data samples. The data analysis technique used is panel data analysis using the e-views program. The results of the study show that Return on equity has a positive and insignificant effect on stock returns, Cash ratio has a negative and significant effect on stock returns, Debt to equity ratio has a positive and insignificant effect on Return, Non-performing loans cannot moderate the effect of return on equity on returns stocks, non-performing loans cannot moderate the effect of cash ratio on stock returns and non-performing loans cannot moderate the effect of debt to equity ratio on stock returns. Keywords: Return on Equity, Cash Ratio and Debt to Equity Ratio, Stock Return, Non-Performing Loan

Faktor-Faktor Yang Mempengaruhi Current Ratio, Debt Equity Ratio, Debt Asset Ratio, Dan Perputaran Modal Kerja Terhadap Return On Asset

Previous research or relevant research is very important in a research or scientific article. Previous research serves to strengthen the theory and phenomenon of the relationship or influence between returns on assets. This article reviews the factors that influence the current ratio, debt equity ratio, and debt asset ratio in an introductory financial management literature study. This study aims to analyze the factors that influence the disclosure of Return on Assets, namely: current ratio, debt equity ratio, debt-asset ratio, and working capital turnover. Samples were selected using purposive sampling method and samples that met the criteria. This study uses the classical assumption test, model feasibility test, multiple regression analysis and statistical t test. These results indicate that the variable current ratio and debt equity ratio have an effect on return on assets, while the debt-asset ratio and working capital turnover variable have no effect on return on assets.