Analysis Of The Effect Of Debt To Equity Ratio, Company Size, Liquidity, And Leverage Operations On Profitability In Real Estate And Property Companies Listed On The Indonesia Stock Exchange Period 2011-2015

Feb 27, 2025 by ADMIN 208 views

Analysis of the Effect of Debt to Equity Ratio, Company Size, Liquidity, and Leverage Operations on Profitability in Real Estate and Property Companies Listed on the Indonesia Stock Exchange Period 2011-2015

Introduction

The real estate and property sectors have been a significant contributor to the Indonesian economy, with numerous companies listed on the Indonesia Stock Exchange (IDX). However, the profitability of these companies can be influenced by various factors, including debt to equity ratio, company size, liquidity, and leverage operations. This study aims to analyze the effect of these factors on the profitability of real estate and property companies listed on the IDX during the period 2011-2015.

Methodology

This study employed a panel data regression analysis technique to analyze the effect of debt to equity ratio, company size, liquidity, and leverage operations on profitability. A sample of 27 companies operating in the real estate and property sectors was taken from the IDX during the period 2011-2015. The data used was secondary data originating from the annual financial statements that had been published.

Effect of Debt to Equity Ratio

The analysis results show that simultaneously, the debt to equity ratio variable, company size, current ratio, and degree of operating leverage have a significant effect on profitability. In particular, Debt to Equity Ratio has been proven to have a significant influence on company profitability. This shows that companies that have higher debt than their equity tend to have better profitability, perhaps because debt can be used for investment that increases income.

The debt to equity ratio is a critical factor in determining a company's financial health. A high debt to equity ratio can indicate that a company is taking on too much debt, which can lead to financial difficulties. However, in the context of real estate and property companies, debt can be used to finance investments that increase income. For example, a company may use debt to finance the purchase of a property that can be rented out, generating a steady stream of income.

Company Size and Profitability

Meanwhile, the company's size does not show a significant effect on profitability. This indicates that the size of the company, both large and small, does not always determine how profitable the company is in its operations. In this context, maybe other factors such as management, marketing strategies, and product innovations affect profitability more than mere size.

Company size can be an important factor in determining a company's profitability. Large companies may have economies of scale, which can lead to lower costs and higher profits. However, small companies may be more agile and able to respond quickly to changes in the market. In the context of real estate and property companies, size may not be as important as other factors such as management and marketing strategies.

Liquidity and Profitability

From the analysis of the current ratio, the results also show that liquidity has no significant influence on profitability. Although companies with high liquidity have the ability to meet short-term obligations, this does not necessarily have a direct impact on the level of profitability produced by the company.

Liquidity is an important factor in determining a company's financial health. Companies with high liquidity have the ability to meet their short-term obligations, which can reduce the risk of financial difficulties. However, in the context of real estate and property companies, liquidity may not be as important as other factors such as debt to equity ratio and company size.

Leverage Operations and Profitability

In addition, the degree of operating leverage also does not show a significant effect on profitability. This might indicate that even though the company has a high operational leverage, other factors such as cost structure and sales volume are more dominant in influencing the profits obtained.

Leverage operations can be an important factor in determining a company's profitability. Companies with high operational leverage may be able to generate higher profits due to the increased efficiency of their operations. However, in the context of real estate and property companies, leverage operations may not be as important as other factors such as debt to equity ratio and company size.

Conclusion

From this overall analysis, it can be concluded that while the debt to equity ratio plays an important role in influencing the profitability of real estate and property companies, company size, liquidity, and operational leverage does not show significant impacts. This provides an important picture for investors and company managers to focus more on the structure of financing and debt management in an effort to increase company profitability. With a better understanding of these factors, it is hoped that companies can make more appropriate decisions in their financial management and business strategies going forward.

Recommendations

Based on the findings of this study, the following recommendations are made:

Debt management: Companies should focus on managing their debt levels to ensure that they are not taking on too much debt. This can be achieved by maintaining a healthy debt to equity ratio and ensuring that debt is used for investments that increase income.
Financial planning: Companies should develop a comprehensive financial plan that takes into account their debt levels, liquidity, and operational leverage. This can help them make more informed decisions about their financial management and business strategies.
Investment in human capital: Companies should invest in their human capital by providing training and development opportunities to their employees. This can help them improve their management and marketing strategies, which can lead to increased profitability.
Market research: Companies should conduct market research to understand their customers' needs and preferences. This can help them develop effective marketing strategies that can lead to increased sales and profitability.

Limitations of the Study

This study has several limitations that should be noted. Firstly, the sample size was limited to 27 companies operating in the real estate and property sectors. Secondly, the data used was secondary data originating from the annual financial statements that had been published. Finally, the study only analyzed the effect of debt to equity ratio, company size, liquidity, and leverage operations on profitability, and did not consider other factors that may influence profitability.

Future Research Directions

This study provides several avenues for future research. Firstly, the study only analyzed the effect of debt to equity ratio, company size, liquidity, and leverage operations on profitability, and did not consider other factors that may influence profitability. Secondly, the study only considered companies operating in the real estate and property sectors, and did not consider companies operating in other sectors. Finally, the study only analyzed the data for the period 2011-2015, and did not consider other time periods.

Conclusion

In conclusion, this study provides an important analysis of the effect of debt to equity ratio, company size, liquidity, and leverage operations on profitability in real estate and property companies listed on the IDX during the period 2011-2015. The study finds that debt to equity ratio has a significant influence on profitability, while company size, liquidity, and operational leverage do not show significant impacts. This provides an important picture for investors and company managers to focus more on the structure of financing and debt management in an effort to increase company profitability. With a better understanding of these factors, it is hoped that companies can make more appropriate decisions in their financial management and business strategies going forward.
Q&A: Analysis of the Effect of Debt to Equity Ratio, Company Size, Liquidity, and Leverage Operations on Profitability in Real Estate and Property Companies Listed on the Indonesia Stock Exchange Period 2011-2015

Q: What is the purpose of this study?

A: The purpose of this study is to analyze the effect of debt to equity ratio, company size, liquidity, and leverage operations on profitability in real estate and property companies listed on the Indonesia Stock Exchange (IDX) during the period 2011-2015.

Q: What is the significance of this study?

A: This study is significant because it provides an important analysis of the factors that influence profitability in real estate and property companies. The findings of this study can help investors and company managers make more informed decisions about their financial management and business strategies.

Q: What are the key findings of this study?

A: The key findings of this study are:

Debt to equity ratio has a significant influence on profitability in real estate and property companies.
Company size, liquidity, and operational leverage do not show significant impacts on profitability.
Companies with higher debt than their equity tend to have better profitability.
Other factors such as management, marketing strategies, and product innovations may affect profitability more than mere size.

Q: What are the implications of this study?

A: The implications of this study are:

Investors and company managers should focus on managing their debt levels to ensure that they are not taking on too much debt.
Companies should develop a comprehensive financial plan that takes into account their debt levels, liquidity, and operational leverage.
Companies should invest in their human capital by providing training and development opportunities to their employees.
Companies should conduct market research to understand their customers' needs and preferences.

Q: What are the limitations of this study?

A: The limitations of this study are:

The sample size was limited to 27 companies operating in the real estate and property sectors.
The data used was secondary data originating from the annual financial statements that had been published.
The study only analyzed the effect of debt to equity ratio, company size, liquidity, and leverage operations on profitability, and did not consider other factors that may influence profitability.

Q: What are the future research directions?

A: The future research directions are:

To analyze the effect of other factors that may influence profitability in real estate and property companies.
To consider companies operating in other sectors.
To analyze the data for other time periods.

Q: What are the practical implications of this study?

A: The practical implications of this study are:

Investors and company managers should use the findings of this study to make more informed decisions about their financial management and business strategies.
Companies should focus on managing their debt levels and developing a comprehensive financial plan.
Companies should invest in their human capital and conduct market research to understand their customers' needs and preferences.

Q: What are the theoretical implications of this study?

A: The theoretical implications of this study are:

The study provides an important contribution to the literature on the factors that influence profitability in real estate and property companies.
The study provides an important analysis of the debt to equity ratio and its impact on profitability.
The study provides an important analysis of the company size, liquidity, and operational leverage and their impact on profitability.

Q: What are the policy implications of this study?

A: The policy implications of this study are:

The study provides an important analysis of the factors that influence profitability in real estate and property companies.
The study provides an important analysis of the debt to equity ratio and its impact on profitability.
The study provides an important analysis of the company size, liquidity, and operational leverage and their impact on profitability.

Conclusion