Examining financial ratios as drivers of profit growth in Indonesian property and real estate companies

Indah Ramadhani and Zulfa Khairina Batubara
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Indah Ramadhani: Department of Management, Faculty of Economics, Universitas Asahan
Zulfa Khairina Batubara: Universitas Asahan

Priviet Social Sciences Journal, 2026, vol. 6, issue 9, 68-82

Abstract: Profit growth is a central input to investor assessment of firm prospects, yet evidence on which financial ratios predict it in Indonesia's property and real estate sector remains inconsistent. This study examines the partial and simultaneous effects of the debt to asset ratio (DAR), total asset turnover (TATO), and net profit margin (NPM) on profit growth. Purposive sampling of firms listed on the Indonesia Stock Exchange yielded 17 companies over 2021–2024, giving 68 firm-year observations analysed by pooled ordinary least squares. The model was significant, F (3, 64) = 4.60, p = .006, explaining 17.8% of the variance in profit growth (adjusted R ² = .139). NPM was the only significant partial predictor, B = 2.264, SE = 0.838, t (64) = 2.70, p = .009, while DAR, p = .570, and TATO, p = .136, were not. Three robustness analyses conducted on the same data materially qualify this conclusion. Winsorising profit growth at the 5th and 95th percentiles reduces NPM to marginal significance ( p = .052) and renders TATO significant ( p = .033); removing a single extreme observation renders both NPM ( p = .166) and the overall model ( p = .118) non-significant; and a firm fixed effects specification, the appropriate estimator for panel data, produces a stronger NPM coefficient ( B = 4.704, p

Keywords: profit growth; net profit margin; total asset turnover; financial leverage; panel data; Indonesia Stock Exchange (search for similar items in EconPapers)
Date: 2026
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DOI: 10.55942/pssj.v6i9.2233

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