The Effect of Current Ratio and Debt to Asset Ratio on Return on Assets at PT Plaza Indonesia Realty Tbk for The 2014-2024 Period
DOI:
https://doi.org/10.37481/sjr.v9i4.1757Keywords:
Current Ratio, Debt to Asset Ratio, Return on Assets, Liquidity, ProfitabilityAbstract
ABSTRACT
Profitability is an important indicator of a company's financial performance, while liquidity and leverage represent two financial aspects that may be associated with profitability. However, previous studies have reported inconsistent findings regarding the relationships between the Current Ratio (CR), Debt to Asset Ratio (DAR), and Return on Assets (ROA). This study aims to examine the partial and simultaneous relationships of CR and DAR with ROA at PT Plaza Indonesia Realty Tbk during 2014-2024. The study uses a quantitative approach based on secondary data obtained from the company's annual financial statements, comprising 11 annual observations. CR and DAR are treated as independent variables, while ROA is the dependent variable. The data were analyzed using multiple linear regression after conducting classical assumption tests, with t-tests used to examine partial relationships and an F-test for the joint relationship. The results show that CR has a significant negative relationship with ROA (t = -3.188; p = 0.013), whereas DAR does not have a statistically significant partial relationship with ROA (t = -0.952; p = 0.369). Simultaneously, CR and DAR are significantly associated with ROA (F = 6.242; p = 0.023), with an R² of 0.609. These findings indicate that liquidity and leverage should be considered together with other operational and financial factors when assessing the company's profitability.
References
Alfiani, D. N. (2022). Pengaruh current ratio dan debt to assets ratio terhadap return on assets. Jurnal Manajemen, 14(1), 206-212. https://doi.org/10.30872/jmmn.v14i1.10905
Al-Homaidi, E. A., Tabash, M. I., Farhan, N. H. S., & Almaqtari, F. A. (2019). The determinants of liquidity of Indian listed commercial banks: A panel data approach. Cogent Economics & Finance, 7(1), 1617014. https://doi.org/10.1080/23322039.2019.1617014
Aryawan, I., & Indriani, A. (2020). Working capital management and profitability: Evidence from Indonesian manufacturing companies. Diponegoro International Journal of Business, 3(1), 36-46. https://doi.org/10.14710/dijb.3.1.2020.36-46
Ayoush, M. D., Toumeh, A. A., & Shabaneh, K. I. (2021). Liquidity, leverage, and solvency: What affects profitability of industrial enterprises the most? Investment Management and Financial Innovations, 18(3), 249-259. https://doi.org/10.21511/imfi.18(3).2021.22
Bintara, R. (2020). The effect of working capital, liquidity and leverage on profitability. Saudi Journal of Economics and Finance, 4(1), 28-35. https://doi.org/10.36348/sjef.2020.v04i01.005
Budhiarjo, I. S., Nurfitriana, Dewi, W. C., & Nurcahayati, S. (2022). The effect of Debt to Assets Ratio (DAR) and Debt to Equity Ratio (DER) on Return on Assets (ROA) at PT Phapros Tbk. Jurnal Administrare: Jurnal Pemikiran Ilmiah dan Pendidikan Administrasi Perkantoran, 9, 721-728.
Bujang, M. A., Sa'at, N., & Sidik, T. M. I. T. A. B. (2022). Determination of minimum sample size requirement for multiple linear regression and analysis of covariance based on experimental and non-experimental studies. Epidemiology, Biostatistics, and Public Health, 19. https://doi.org/10.2427/12117
Chitta, S., Soni, H., & Prasad, K. D. V. (2023). Optimal working capital management: Balancing liquidity and profitability in financial management. REICE: Revista Electrónica de Investigación en Ciencias Económicas, 11(22). https://doi.org/10.5377/reice.v11i22.17342
Flatt, C., & Jacobs, R. L. (2019). Principle assumptions of regression analysis: Testing, techniques, and statistical reporting of imperfect data sets. Advances in Developing Human Resources, 21(4), 484-502. https://doi.org/10.1177/1523422319869915
Hartanti, I. T., Ruhadi, R., & Suryani, A. (2022). Effect of CR and DAR on ROA in automotive and component companies listed on the IDX. Indonesian Journal of Economics and Management, 3(1), 122-129. https://doi.org/10.35313/ijem.v3i1.3870
Hutnaleontina, P. N., Padnyawati, K. D., & Dewi, I. G. A. T. C. (2023). Leverage, liquidity, and working capital efficiency affect manufacturing companies’ profitability on the IDX. Enrichment: Journal of Management, 13(4), 2689-2698. https://doi.org/10.35335/enrichment.v13i4.1631
Korkmaz, M. (2019). A study over the formulation of the parameters 5 or less independent variables of multiple linear regression. Journal of Function Spaces, 2019, Article 1526920. https://doi.org/10.1155/2019/1526920
Lestari, A., & Oktrima, B. (2024). Pengaruh Current Ratio dan Debt to Asset Ratio terhadap Return on Asset pada PT Acset Indonusa Tbk periode 2013-2023. Jurnal Ilmiah PERKUSI, 4(4), 595-604. https://doi.org/10.32493/j.perkusi.v4i4.43970
Mardiati, D., & Permatasari, S. P. (2022). Effect of Current Ratio and Debt to Asset Ratio against Return on Assets: Empirical study on pharmaceutical sector companies listed on the Indonesia Stock Exchange (BEI) 2016-2020 period. Jurnal Office, 8(1). https://doi.org/10.26858/jo.v8i1.32910
Mehmood, A., Mirza, A., Saad, M., & Ali, A. (2022). The influence of liquidity and leverage on profitability: An evidence from textile industry of Pakistan. Pakistan Journal of Humanities and Social Sciences, 10(4), 1415-1423. https://doi.org/10.52131/pjhss.2022.1004.0301
Morshed, A. (2020). Role of working capital management in profitability considering the connection between accounting and finance. Asian Journal of Accounting Research, 5(2), 257-267. https://doi.org/10.1108/AJAR-04-2020-0023
Nainggolan, D., Nathalia, C., Tarigan, H., Siburian, P., & Sinaga, J. (2020). The effect of working capital, solvability and liquidity on profitability in infrastructure, transportation, and utility. Jurnal Ilmiah Manajemen, Ekonomi, & Akuntansi (MEA), 4(3), 824-839. https://doi.org/10.31955/mea.v4i3.445
Rizaldy, R., & Hariasih, M. (2023). Unlocking profitability in Indonesian banks: The impact of liquidity and working capital turnover. Indonesian Journal of Law and Economics Review, 19(2). https://doi.org/10.21070/ijler.v19i0.910
Rutlan, I., & Syafitri. (2026). Pengaruh Debt Asset Ratio dan Current Ratio terhadap Return on Asset pada perusahaan makanan dan minuman yang terdaftar di Bursa Efek Indonesia (BEI) tahun 2020-2024. Sosial dan Humaniora, 5(3). https://doi.org/10.56799/peshum.v5i3.14470
Sani, R. R., & Dinuka, V. K. (2023). Effect of working capital efficiency, liquidity and leverage against profitability. Proceedings of the 4th International Conference on Applied Economics and Social Science (ICAESS 2022). https://doi.org/10.4108/eai.5-10-2022.2325904
Sany, S., Winata, A., & Yasin, T. V. (2023). Working capital management and leverage to profitability: Case of manufacturing firms in Indonesia. International Journal of Organizational Behavior and Policy, 2(1), 55-66. https://doi.org/10.9744/ijobp.2.1.55-66
Setiawan Maulana, A., & Sari Budhiarjo, I. (2024). Pengaruh Current Ratio (CR) dan Debt to Asset Ratio (DAR) terhadap Return on Assets (ROA) pada PT Kalbe Farma Tbk periode 2014-2023. KREATIF: Jurnal Ilmiah Prodi Manajemen Universitas Pamulang, 12(2), 158-164. https://doi.org/10.32493/jk.v12i2.y2024.p158-164
Sunaryo, D., & Lestari, E. P. (2021). The effect of debt to asset ratio and debt to equity ratio against return on assets. Proceedings of the 2nd Borobudur International Symposium on Humanities and Social Sciences (BIS-HSS 2020). https://doi.org/10.4108/eai.18-11-2020.2311805
Syafruddin, M., Weinanto, C. J., & Haryani, H. (2023). Evidence of financial ratio impact on non-financial firm profitability. Accounting Analysis Journal, 12(2), 102-111. https://doi.org/10.15294/aaj.v12i2.70466
Tabe, R., Niode, O. S., & Majid, J. (2023). Working capital efficiency, liquidity, and solvency on profitability of Indonesian state-private bank. Assets: Jurnal Ekonomi, Manajemen dan Akuntansi, 13(1), 17-27. https://doi.org/10.24252/assets.v13i1.31923
Yadav, I. S., Pahi, D., & Gangakhedkar, R. (2022). The nexus between firm size, growth and profitability: New panel data evidence from Asia-Pacific markets. European Business Review, 31(1), 115-140. https://doi.org/10.1108/EJMBE-03-2021-0077
