INFLUENCE OF FINANCIAL RATIOS TOWARD RETURN ON ASSETS OF INDONESIA’S FURNITURE COMPANIES

Abstract

In midst of current geopolitical instability, furniture industry is confronted with challenges arising from the global economic uncertainty. In this era, furniture companies are expected to optimize their operations to achieve maximum profitability while considering financial ratios. The objective of this research is to evaluate impact of Current Ratio, Debt to Equity Ratio, Total Asset Turnover, and Net Profit Margin on Return on Asset in furniture industry companies listed on the Indonesia Stock Exchange from 2019 to 2022. This study employs a quantitive method, utilizing secondary data obtained from www.idx.co.id. Sampling method involves saturation sampling. Analytical tools include descriptive statistical analysis, normality test, mulicollinearity test, heteroskedasticity test, autocorrelation test, multiple linear regression analysis, T-test, F-test and the determination coefficient (R2) test. The result of the analysis in this study concludes that independent variables, namely Current Ratio and Debt to Equity Ratio partially have not significant impact to the dependent variable, Return on Asset in furniture industry companies listed on the Indonesia Stock Exchange from 2019 to 2022. Whilst, Total Asset Turnover and Net Profit Margin have significant and positive impact to dependent variable, Return on Asset in furniture industry companies listed on Indonesia Stock Exchange from 2019 to 2022. Result of this analysis also concludes that simultaneously, all independent variables such as Current Ratio, Debt to Equity Ratio, Total Asset Turnover and Net Profit Margin have a significant and positive impact to dependent variable, Return on Asset in furniture industry companies listed on Indonesia Stock Exchange from 2019 to 2022.