Return On Equity Research Articles

Effect of Long-Term Debt on Financial Performance of Cement Manufacturing Companies

Due to its critical role in overall economic development, the cement industry is identified as one of the areas of the first and second Growth and Transformation Plan (GTP) as a sector of special consideration. However, the main objective of this study is to examine the effect of long-term debt on financial performance in cement manufacturing companies. Moreover, the specific objectives include; examining the effect of long-term debt on return on assets in cement manufacturing companies, also, to examine the effect of long-term debt on return on equity in cement manufacturing companies, in addition, the study identifies two financial performance measures which include; return on assets and return on equity, and directly considered with the relationship of long-term debt. The methodology of this study is exclusive criteria; because the study reviewed only recent studies from 2019-2023 that reported on long-term debt and financial performance. The data is gathered through the means of review and analyzed through identifying the outcome of the reviewed studies. Therefore, based on the majority, the study found a significant negative influence of long-term debt (LTD) on financial performance measured by return on assets (ROA) of cement manufacturing companies and also, a negative effect was found with the financial performance measured by return on equity (ROE) of cement manufacturing companies. In line with the findings, the study concludes that there is a negative effect of long-term debt on financial performance measured by both the (ROA and ROE) of cement manufacturing companies. Similarly, the study recommends that cement manufacturing companies avoid the use of debt in financing their assets; also, the cement manufacturing companies should also focus much on internal financing so as to improve shareholder returns.

Pengaruh Return on Equity dan Current Ratio terhadap Dividend Payout Ratio pada Perusahaan Manufaktur Sektor Basic Materials Terdaftar di BEI Periode 2018-2023

This study aims to explore the impact of financial factors, such as Return On Equity, Current Ratio on Dividend Payout ratio in manufacturing companies in the basic Materials sector listed on the IDX from 2018 to 2023. This study uses a quantitative method. The population and sample in this study are the annual financial statements of manufacturing companies in the basic materials sector in 2018-2023. The sample in this study consists of 54 financial statements taken using a purposive sampling technique. The data analysis used in this study is multiple linear regression analysis using the help of the SPSS 22 application. The results of the study show that partially the Return On Equity (ROE) variable has a significant effect on the Dividend Payout Ratio (DPR). Meanwhile, the Current Ratio (CR) variable has no effect on the Dividend Payout Ratio (DPR). Meanwhile, the Current Ratio (CR) variable has no effect on the Dividend Payout Ratio (DPR). Simultaneously, the Return On Equity (ROE) and Current Ratio (CR) variables affect the Dividend Payout Ratio (DPR) with a determination coefficient value of 21.6%.

The Effect of Disclosure of Sustainable Development Goals on the Financial Performance of Banking Companies in Indonesia

This study aims to analyze the impact of Sustainable Development Goals (SDG) disclosure on the Return On Assets (ROA) of banking companies in Indonesia, to analyze the impact of SDG disclosure on the Return On Equity (ROE) of banking companies in Indonesia, and to analyze the impact of SDG disclosure on the Return On Investment (ROI) of banking companies in Indonesia. The data used in this research are secondary data sourced from the Annual Reports and Sustainability Reports of financial service companies in the banking sector listed on the Indonesia Stock Exchange (IDX) for the period 2019-2023. The research sample was selected using purposive sampling method, resulting in 15 companies as samples. The data analysis used for hypothesis testing is panel data analysis using Eviews 12 software. The results of the study indicate that SDG disclosure has a positive effect on ROA, SDG disclosure has a positive effect on ROE, and SDG disclosure has a positive effect on ROI of banking companies in Indonesia. These findings provide important empirical evidence that can encourage banking companies to pay more attention to and integrate SDGs into sustainable business strategies to achieve optimal financial performance, and promote more comprehensive and transparent SDG disclosure regulations to help investors make better investment decisions, as well as encourage investors to consider sustainability factors in their investment decisions. The implication of this research is the encouragement for banking companies to pay more attention and integrate SDGs in business strategy.

Funding Liquidity and Risk-Taking Behavior of Banks in India

This study, utilizing bank-level data for India, investigates the relationship between funding liquidity and banks’ risk-taking behavior. The study uses two risk measures: risk-weighted assets (encompassing credit, market, and operational risk) and liquidity creation (encompassing intermediacy risk). Findings reveal that banks with higher funding liquidity exhibit higher risk-taking behavior. This risk-taking behavior is more pronounced during economic recuperation and expansionary monetary policy phases. Notably, during economic recuperation, banks display heightened intermediacy risk, contrasting with the absence of such evidence during expansionary monetary policy phases. Larger banks with higher deposit shares demonstrate lower risk-taking behavior. Additionally, banks with a return on equity (ROE) below the average ROE exhibit a proclivity for increased risk-taking. This study advocates for liquidity regulation as a crucial complement to bank capital regulation, offering empirical support for moderate risk-taking among highly liquid banks and fortify their balance sheets for a stable banking system in India. JEL Codes: E32, E52, G21, G28

Sustainability and financial performance in the banking industry of the United Arab Emirates

Today's banking industry achieving sustainable profitability necessitates by integrating economic, environmental, and social factors due to pressing environmental concerns. This study investigates the impact of sustainability on financial performance in the United Arab Emirates (UAE) banking sector, using the Autoregressive Distributed Lag (ARDL) and Bootstrapping ARDL approaches on data from 2002 to 2022. The analysis revealed that economic sustainability, environmental and social sustainability exhibit a significant impact on financial performance in the short run and the long run at a (p < 0.05). 1% of economic sustainability activities increases Return on Assets (ROA) by 0.73 and Return on Equity (ROE) by 0.64. 1% of environmental sustainability activities decreases ROA by −0.28 and increases ROE by 0.35. 1% of social sustainability activities increases ROA by 0.47 and ROE by 0.42. To improve long-term profitability, this study emphasizes how crucial it is for the banking industry in the UAE to strategically integrate sustainability principles. These findings highlight the need to promote sustainability in the banking sector for environmental improvement, offering insights for UAE regulators and stimulating additional research.

STUDI EKSPLORASI FAKTOR PENENTU PENILAIAN HARGA SAHAM PT SEMEN INDONESIA (PERSERO) TBK

This research explores the share price performance of PT Semen Indonesia (Persero) Tbk from 2019 to 2023 using descriptive analysis methods. The research focus includes variables such as Earnings Per Share (EPS), Debt to Equity Ratio (DER), Total Asset Turnover (TATO), Return on Equity (ROE), Current Ratio (CR), Price Earning Ratio (PER), and Net Profit Margin (NPM). The data used comes from the annual financial report of PT Semen Indonesia. Research findings show that the company experiences significant fluctuations in EPS which are influenced by sales dynamics and operational costs.ROE shows variations in the efficiency of using own capital, while DER decreases consistently, reflecting good management in debt management. TATO and ROA experienced fluctuations, reflecting the company's efforts to optimize the use of assets to increase operational efficiency. The company's liquidity, as reflected in the CR remains stable in meeting short-term obligations. Even though PER has decreased, indicating a lower market assessment of share valuation, NPM varies due to fluctuating operational costs. To improve stability and profitability in the future, the company's focus needs to be increased on operational efficiency and better cost management

ANALISIS RASIO PROFITABILITAS DALAM MENGUKUR KINERJA KEUANGAN PERUSAHAAN PT. INDOFOOD SUKSES MAKMUR TBK

The purpose of this research is to analyze the Profitability Ratios in measuring the Financial Performance of PT. Indofood Sukses Makmur Tbk. The method used is quantitative analysis in the form of Financial Statements. The technique employed is descriptive analysis using financial ratios. The results of this research indicate that, based on the average profitability ratios from 2019-2023, the company is capable of measuring profit growth with the profitability ratio of PT. Indofood Sukses Makmur Tbk, in terms of Return on Assets (ROA), whereas Return on Equity (ROE) is still considered very low or has not yet met the industry ratio standards. The average ROA ratio is 7.84%, while the industry standard value is less than 20%, and the average ROE ratio is 14.21%, but it has not met the industry standard value of less than 25%. However, the Gross Profit Margin (GPM) exceeds the profitability industry ratio standards, as the GPM has an average ratio of 34.58%, with the industry standard ratio value being more than 30%. This indicates that the company has not yet been able to manage its finances effectively in terms of ROA and ROE, but it has managed its finances effectively in terms of GPM, meeting the operational standards.

IMPACT OF CREDIT RISK MANAGEMENT ON PROFITABILITY OF COMMERCIAL BANKS: A CASE STUDY IN VIETNAM

The main purpose of this study is to examine the impact of credit risk management on profitability of commercial banks in Vietnam. While the existing literature emphasizes the necessity for a more in-depth study and additional empirical evidence to elucidate intricate relationships between market dynamics and credit risk, particularly in the context of commercial banks in Southeast Asia, there remains a gap in comprehensive studies, with a specific focus on Vietnam. The secondary data was collected from 20 commercial banks from the country for the period of 11 years, from 2012 to 2022. The study used non-performing loans ratio (NPLR), capital adequacy ratio (CAR) as well as loan-loss provision ratio (LLPR) as proxies of credit risk while the financial performance is measured by return on equity (ROE). Moreover, the bank's characteristics, such as its size (SIZE), the macroeconomic inflation rate (INF), and a dummy variable that looks at how ownership type (OWN) affects the bank's profitability are all applied to quantify the independent variables. The model does not exhibit the multicollinearity issue, according to the mean Variance Inflation Factor (VIF) data. The regression results reveal that SIZE, CAR and INF variables have a significant positive effect on ROE, while the NPLR variable has an opposite significant effect on ROE. Nevertheless, there is no connection between the ROE-measured financial performance of commercial banks and the OWN or LLPR variables. This offers further valuable insights to bankers and policy makers in credit risk management of commercial banks in Vietnam to enhance the stability of the Vietnamese banking system.

Capital Structure and Performance of Small and Medium Enterprises: Empirical Evidence from Tanzania

This research delves into the effects of capital structure on the performance of small- and medium-sized enterprises (SMEs) in Tanzania. The research is predicated on 276 SMEs in Tanzania. Panel data including 828 observations for the years 2017–2019 were used. To evaluate the models, an ordinary least-squares test was employed. Return on capital employed (ROCE), return on equity (ROE) and return on assets (ROA) were employed to measure the SMEs’ performance. The findings reveal that total debt, short- and long-term debts have a negative effect on ROCE, ROE and ROA. Generally, the results uphold the Pecking Order Theory, which postulates a negative correlation between debt and firm performance. The results imply that firms with large debt levels have lower performance. This study recommends that SMEs’ financial managers should choose their capital structure carefully by avoiding excessive debt, in order to increase the firm’s overall worth, thereby maximizing firms’ performance. The investigation adds to earlier research by giving another point of view in Tanzania through analysing SMEs’ capital structure and performance by utilizing manufacturing sectors in their entirety while employing a panel data analysis.

Research on Relationship Between Governance Structure and Corporate Performance of Chinese Technology Companies

In the post-pandemic age of 2023, the economy is in recovery. Despite the distinctive qualities of technology firms, such as quick development and high levels of innovation, they face problems such as economic downturns and funding issues. As a result, the corporate governance structure is critical to guaranteeing the firms' long-term viability. The purpose of this article is to examine 252 publicly traded technology companies and investigate the link between corporate financial performance and corporate governance arrangements. This article used Ordinary Least Squares (OLS) analysis to look at the link between board independence, Chief Executive Officer (CEO) duality, ownership concentration, and return on equity (ROE). The regression findings indicate a negative association between ROE and the proportion of independent directors. However, there is no substantial association between the duality of ROE and the CEO, and ROE has a U-shaped relationship with ownership concentration. The study's findings imply that corporate executives and regulators should adopt an effective monitoring mechanism to ensure the impartiality and reliability of independent directors' oversight. To ensure strong financial performance, organizations should maintain appropriate levels of independent director percentages and stock concentration.

PERUBAHAN KOMBINASI BISNIS: IMPLEMENTASI DAN DAMPAK PSAK 22 TERHADAP KINERJA KEUANGAN PERUSAHAAN

This article examines the implementation of business combination accounting before and after the implementation of PSAK 22, now known as PSAK 103 on Business Combinations, with a literature study approach. This study evaluates the effect of PSAK 22 on the company's financial performance through the analysis of Return on Assets (ROA), Return on Equity (ROE), and profit margin. Before PSAK 22, companies usually used the “pooling of interest” or “purchase method”. Analysis from previous studies shows that business combinations have a significant effect on ROA, ROE, and profit margins. While mergers and acquisitions often improve financial performance, the results vary across sectors. This article aims to serve as a reference for further research on business combinations with PSAK 22/103, and requires a wider range of case studies and more diverse variables.

Evaluation of the Impact of Monetary Policy on the Financial Performance of Manufacturing Companies: Implications of Interest Rates, Inflation and Macroeconomic Stability

This study aims to evaluate the impact of monetary policy on the financial performance of manufacturing companies in Indonesia, emphasising the implications of interest rates, inflation, and macroeconomic stability. Using a quantitative approach through multiple regression analysis, this study analyzes the relationship between monetary policy variables of Bank Indonesia's benchmark interest rate, inflation rate, exchange rate, foreign exchange reserves, and budget deficit with the company's financial performance, as measured using Return on Assets (ROA), Return on Equity (ROE), and Net Profit Margin (NPM). Secondary data used in this study include the annual financial reports of manufacturing companies listed on the Indonesia Stock Exchange (IDX) from 2015-2023. The study results indicate that the benchmark interest rate has a significant negative effect on ROA and ROE. In contrast, the inflation rate shows varying impacts on NPM and other financial performance. In addition, macroeconomic stability is measured through indicators of the rupiah exchange rate against the USD, foreign exchange reserves, and budget deficit, which significantly affect the company's financial performance. These findings emphasize the importance of monetary policy and macroeconomic stability in determining the profitability of manufacturing companies in Indonesia. This study implies that corporate management needs to develop more adaptive strategies to deal with fluctuations in monetary policy and macroeconomic conditions. In addition, policymakers need to consider the long-term impact of monetary policy on the manufacturing sector to create an economic environment conducive to industrial growth. This study contributes significantly to the literature on the impact of monetary policy on corporate financial performance in emerging markets.

Predicting Financial Performance in the IT Industry with Machine Learning: ROA and ROE Analysis

IT is recognized as the engine of the digital world. The fact that this technology has multiple sub-sectors makes it the driving force of the economy. With these characteristics, the sector is becoming the center of attention of investors. Considering that investors prioritize profitability, it becomes a top priority for managers to make accurate and reliable profitability forecasts. The aim of this study is to estimate the profitability of IT sector firms traded in Borsa Istanbul using machine learning methods. In this study, the financial data of 13 technology firms listed in the Borsa Istanbul Technology index and operating between March 2000 and December 2023 were used. Return on assets (ROA) and return on equity (ROE) were estimated using machine learning methods such as neural networks, multiple linear regression and decision tree regression. The results obtained reveal that the performance of artificial neural networks (ANN) and multiple linear regression (MLR) are particularly effective.

Corporate governance dynamics in financial institution performance: A panel data analysis

The study aims to identify the effect of corporate governance factors on financial institution performance in Bangladesh. This study employs annual data for 20 financial institutions, including banks, NBFIs, and insurance companies, data is collected from 2011 to 2022. Here, three corporate governance indicators are utilized – board size, board independence, and director’s ownership. The performance of the financial institutions is measured using return on assets (ROA), return on equity (ROE), and net asset value (NAV). Apart from the corporate governance variables, three company-specific factors, i.e., firm age, financial leverage, and firm size, are used as the control variables. Panel data analysis is conducted through the dynamic Feasible Generalize Least Square (FGLS) method, and the robustness is performed using the random effect model. The results show that corporate governance parameter such as board size has a significant positive influence on financial institution performance in Bangladesh, where board independence and director ownership do not have a significant influence on the performance of financial institutions. Thus, the performance of financial institutions increases when board size increases. This indicates that board members are actively engaged in strategic decision-making and ensure the rights of all stakeholders, which helps improve financial institutions’ overall performance. Therefore, financial institutions may increase their board size to the maximum level to ensure better corporate governance practices in the organizations, which ultimately increases performance.

Pengaruh Debt To Equity Ratio, Return On Equity, Pertumbuhan Perusahaan dan Ukuran Perusahaan Terhadap Nilai Perusahaan yang Terindek pada LQ-45 di Bursa Efek Indonesia

This research aims to examine the influence of Debt to Equity Ratio (DER), Return On Equity (ROE), company growth and company size on the value of companies indexed on LQ-45 on the Indonesia Stock Exchange in the 2020-2022 period. The sample in this study was 23 companies indexed on the LQ-45 which were selected using the purposive sampling method. Research data was obtained from the official website owned by Busa Efek Indonesia, the data was processed using the SPSS version 23.0 program, and analyzed using multiple linear regression. The research results show (1) Debt to Equity Ratio (DER) has a negative and insignificant effect on Company Value, as evidenced by the calculated t value being smaller than the t table, namely -1.022 &lt; 1.668, with a significant value of 0.31 &gt; 0.05. (2) Return On Equity (ROE) has a positive and significant effect on Company Value, as evidenced by the calculated t value being greater than the t table, namely 12.593 &gt; 1.668, with a significant value of 0.00 &lt; 0.05. (3) Company growth has a negative and significant effect on company value, as evidenced by the calculated t value being smaller than the t table, namely -2.861&lt;1.668, with a significant value of 0.006&lt;0.05. (4) Company size has a negative and insignificant effect on company value, as evidenced by the calculated t value being smaller than the t table, namely -1.233 &lt; 1.668, with a significant value of 0.22 &gt; 0.05.

Determinants of Corporate Social Responsibility in Nepalese Commercial Banks

The study attempts to examine the determinants of corporate social responsibility in Nepalese commercial banks. Corporate social responsibilities (CSR) is the dependent variable and the selected independent variables are return on assets (ROA), return on equity (ROE), bank age (BA), bank size (BS) and liquidity. The study is based on primary as well as secondary data. The primary data consists of questionnaires to 125 respondents from 18 commercial banks. The secondary data includes the observations from 18 commercial banks for the period of 2014/15 to 2020/21. The secondary data were collected from Banking and Financial Statistics published by Nepal Rastra Bank and the annual report of respective banks. The correlation coefficients and regression models are estimated to test the significance and importance of ROA, ROE, BA, BS and liquidity on determining CSR activities in Nepalese commercial banks. The result showed that ROA has a positive impact on CSR of Nepalese commercial banks. It indicates that increase in ROA of bank would leads to increase in CSR activites. Likewise, the results also showed that ROE has a positive impact on CSR. It means that higher the ROE, higher would be the CSR related activities. Similarly, the study also found that bank size is positively related to the bank CSR. This indicates that the larger the bank size, greater would be the CSR of such banks. Moreover, bank age also has a positive impact on CSR. It suggests that older banks are likely to perform greater CSR activities than newer banks. In addition, the study showed that liquidity has a negative impact on CSR. This means that higher the level of liquidity in the banks, lower would be the CSR activities of Nepalese commercial banks. The study revealed that the most dominant factor that determines the CSR is liquidity followed by ROE in the context of Nepalese commercial banks.

The Effect of Corporate Social Responsibility (CSR) on Financial Performance

Himbara Bank has a very significant role in driving economic growth, managing national assets, and providing sustainable financial services to the community. However, its role is not only limited to financial aspects but also holds social responsibility towards society and the environment. Therefore, it is important to understand the extent to which CSR can influence Bank Himbara's financial performance in this dynamic business environment. This research aims to find information on the effect of implementing Corporate Social Responsibility (CSR) on financial performance based on Return on Equity (ROE). In this research, the population used is banks included in the Association of State-Owned Banks (Himbara) for 2019-2022. The data analysis techniques used are descriptive statistical analysis and panel data regression analysis. Based on research results, Corporate Social Responsibility (CSR) did not have a significant effect on Return on Equity (ROE) in the Association of State-Owned Banks (Himbara) in 2019-2022.

PENGARUH PROFITABILITAS DAN UKURAN PERUSAHAAN TERHADAP STRUKTUR MODAL PADA PERUSAHAAN KONSTRUKSI YANG TERDAFTAR DI BEI PERIODE 2018-2022

The aim of this research is to determine the effect of profitability and company size on the capital structure of construction companies registered in BEI for the 2018-2022 period, through financial ratios as research variables, namely profitability consisting of Return on Assets (ROA), Return on Equity (ROE) and Return on Investment (ROI), company size (SIZE) and capital structure or Debt to Equity Ratio (DER). This research uses secondary data, namely company financial publications via the Indonesia Stock Exchange website (www.idx.co.id). The research results show that by partial data testing, the Profitability variable has a significant effect on the Capital Structure of Construction Companies Registered in BEI for the 2018-2022 period, so H1 is accepted. Partially, the company size variable has no effect on the capital structure of construction companies registered on BEI for the 2018-2022 period, so H2 is rejected. Then the profitability and company size variables simultaneously have a positive and significant effect on the capital structure of construction companies registered with BEI for the 2018-2022 period, so H3 is accepted.

Fundamental Analysis of Stock Price Changes in Pharmaceutical Subsector Companies Listed on the Indonesia Stock Exchange for the Period 2016 – 2020

The aim of this research is to analyse the impact of Return On Assets (ROA), Return On Equity (ROE), and Earnings Per Share (EPS) on the stock prices of pharmaceutical companies listed on the Indonesia Stock Exchange. This study employs a quantitative approach. The data used are secondary data in the form of company financial reports obtained from the Indonesia Stock Exchange (IDX). The sample selection in this study used purposive sampling, which involves selecting samples based on specific criteria. The data analysis method applied is multiple linear regression analysis. The results of this study indicate that the independent variable ROE positively correlates with stock price prediction, as evidenced by a calculated t-value of 5.721, which is greater than the critical t-value of 2.02619. EPS also positively correlates with stock price prediction, with a calculated t-value of 2.004, which is slightly less than the critical t-value of 2.02619. However, the ROA variable negatively correlates with stock price prediction, with a calculated t-value of -4.273, which is less than the critical t-value of 2.02619. Return On Assets (ROA), Return On Equity (ROE), and Earnings Per Share (EPS) collectively have a significant impact on stock prices. From the regression coefficient test, it is concluded that 56% of the stock price can be explained by the independent variables. This study illustrates that the pharmaceutical subsector companies listed on the Indonesia Stock Exchange rely more on a strong capital structure to improve financial performance, with a focus on increasing stock prices.

The Influence of the Composition of a Company's Capital on Financial Performance

In the aftermath of a pandemic, companies struggle with survival and expansion issues. Companies are increasingly paying attention to their capital structure, which is vital for competitiveness, profitability, and financial stability. This paper looks at how long-term debt ratio (LTDR) and short-term debt ratio (STDR) affect return on equity (ROE) and return on assets (ROA). This paper wants to untangle the complex interactions among the financial profiles of S&amp;P 500 firms covering the years 2010 to 2023. The findings suggest that while STDR adversely influences both, OLS regression shows LTDR's favorable relationship to ROA and ROE. Including firm size and liquidity (LQDT) improves the model's explaining ability. In the post-crisis age, financial stability and performance improvement depend on strategic capital structure decisions. Considering all factors, this article contributes to the ongoing discussion by examining how enhancing capital structures can boost businesses' resilience and performance in the wake of global events.