Implementation of Financial Ratios: Evidence from the Indonesia Stock Exchange
Rizki Nurfian
Management Study Program, Faculty of Economics and Business, University Muhammadiyah Purwokerto, Indonesia.
Ika Yustina Rahmawati *
Management Study Program, Faculty of Economics and Business, University Muhammadiyah Purwokerto, Indonesia.
Naelati Tubastuvi
Management Study Program, Faculty of Economics and Business, University Muhammadiyah Purwokerto, Indonesia.
Fatmah Bagis
Management Study Program, Faculty of Economics and Business, University Muhammadiyah Purwokerto, Indonesia.
*Author to whom correspondence should be addressed.
Abstract
Objective: Knowing the influence between capital structure, intellectual capital, and good corporate governance mechanisms on the company's financial performance.
Study Design: The population in this study consists of 87 primary consumer goods sector companies listed on the Indonesia Stock Exchange (IDX) for the period 2020-2022. Data from this study comes from the company's annual report.
Place and Duration of Study: Primary consumer goods sector companies listed on the Indonesia Stock Exchange for the period 2020-2022
Methodology: The method used in data collection is using purposive sampling techniques. For the sample used in this study, a total of 147 company data using multiple regression analysis, model fit test, and hypothesis test were tested using the Eviews 10 analysis tool.
Results: The results showed that intellectual capital variables and the board of commissioners affected profitability according to the hypothesis, while the capital structure variables, audit committee, and board of directors did not affect the profitability of the company which rejected the initial hypothesis.
Conclusion: This quantitative research assesses the impact of financial management, corporate governance, and intellectual capital utilization on the financial performance of primary consumer companies, utilizing numerical data to test hypotheses. Specifically, it evaluates the relationships between profitability, liquidity, solvency, board composition, audit committee structure, and value added efficiency of human and structural capital on company returns. The analysis intends to optimize financial ratio performance, governance mechanisms, and intellectual capital employment to improve firm profitability within the sector.
Keywords: Capital structure, intellectual capital, corporate governance, financial performance