The Effect of Leverage and Firm Size to Profitability of Public Manufacturing Companies in Indonesia

Dwi Kartikasari and Marisa Merianti
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Dwi Kartikasari: Department of Management and Business, Batam State Polytechnic, Batam, Indonesia
Marisa Merianti: Department of Business Administration, Batam State Polytechnic, Batam, Indonesia

International Journal of Economics and Financial Issues, 2016, vol. 6, issue 2, 409-413

Abstract: This study aimed to analyze the effect of leverage and the size of a company to its profitability. Data were obtained from the financial statements of 100 qualified manufacturing companies listed in Indonesia Stock Exchange in the period of 2009-2014. Leverage was measured by debt ratio, while firm size was measured by total assets and total sales, and profitability by return on assets. Panel data regression analysis was implemented to analyze the influence of independent variables to the dependent variable. The most suitable panel data regression model in this study was a fixed effect model. The study found that the debt ratio had a significant positive effect on profitability while total assets had a significant negative impact. In contrast, total sales had statistically insignificant effect to the profitability of the companies

Keywords: Leverage; Firm Size; Profitability (search for similar items in EconPapers)
JEL-codes: M21 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ1:2016-02-6

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