The Effect of Profitability, Leverage, Firm Size, and Liquidity on Firm Value: Evidence from Consumer Non-cyclicals Companies Listed on the Indonesia Stock Exchange

Mita Audia Rahman, Hendrawan Santoso Putra and Muhammad Miqdad
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Mita Audia Rahman: Department of Accounting, Faculty of Economics and Business, University of Jember, Kabupaten Jember, Indonesia.
Hendrawan Santoso Putra: Department of Accounting, Faculty of Economics and Business, University of Jember, Kabupaten Jember, Indonesia.
Muhammad Miqdad: Department of Accounting, Faculty of Economics and Business, University of Jember, Kabupaten Jember, Indonesia.

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Abstract: This study examines the relationship between profitability, leverage, firm size, liquidity, and firm value among consumer non-cyclicals companies listed on the Indonesia Stock Exchange. A quantitative explanatory design was applied using a balanced panel of 40 firm-year observations from eight issuers over the fiscal years 2021–2025. Firm value was measured by price-to-book value, profitability by return on assets, leverage by debt-to-equity ratio, firm size by the natural logarithm of total assets, and liquidity by the current ratio. The data were compiled from publicly available financial ratio and balance sheet information. The empirical model was estimated using pooled ordinary least squares with HC3 robust standard errors, supported by descriptive statistics, correlation analysis, diagnostic testing, and sensitivity estimation. The results show that profitability has a positive and statistically significant association with firm value, while liquidity has a negative and statistically significant association. Leverage and firm size do not show statistically significant effects in the primary model. The model reports an R-squared value of 0.872 and an adjusted R-squared value of 0.857. The findings suggest that market valuation in the sampled companies is more closely associated with earnings-generating capability than with asset scale. The negative liquidity result indicates that high current assets may not be valued positively when they are not linked to stronger profitability or efficient working capital use.

Date: 2026-07-18
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Published in Journal of Global Economics, Management and Business Research, 2026, 18 (3), pp.118-142

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