IDEAS home Printed from https://ideas.repec.org/a/eco/journ1/2016-02-6.html
   My bibliography  Save this article

The Effect of Leverage and Firm Size to Profitability of Public Manufacturing Companies in Indonesia

Author

Listed:
  • Dwi Kartikasari

    (Department of Management and Business, Batam State Polytechnic, Batam, Indonesia)

  • Marisa Merianti

    (Department of Business Administration, Batam State Polytechnic, Batam, Indonesia)

Abstract

This study aimed to analyze the effect of leverage and the size of a company to its profitability. Data were obtained from the financial statements of 100 qualified manufacturing companies listed in Indonesia Stock Exchange in the period of 2009-2014. Leverage was measured by debt ratio, while firm size was measured by total assets and total sales, and profitability by return on assets. Panel data regression analysis was implemented to analyze the influence of independent variables to the dependent variable. The most suitable panel data regression model in this study was a fixed effect model. The study found that the debt ratio had a significant positive effect on profitability while total assets had a significant negative impact. In contrast, total sales had statistically insignificant effect to the profitability of the companies

Suggested Citation

  • Dwi Kartikasari & Marisa Merianti, 2016. "The Effect of Leverage and Firm Size to Profitability of Public Manufacturing Companies in Indonesia," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 409-413.
    • Handle: RePEc:eco:journ1:2016-02-6
    as

    Download full text from publisher

    File URL: http://www.econjournals.com/index.php/ijefi/article/download/1763/pdf
    Download Restriction: no
    File URL: http://www.econjournals.com/index.php/ijefi/article/view/1763/pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Massimiliano Cerciello & Francesco Busato & Simone Taddeo, 2023. "The effect of sustainable business practices on profitability. Accounting for strategic disclosure," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(2), pages 802-819, March.
    2. Godfrey Marozva & Margaret Rutendo Magwedere, 2017. "Macroeconomic Variables, Leverage, Stock Returns and Stock Return Volatility," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 13(4), pages 264-288, AUGUST.
    3. Kankam-Kwarteng, Collins & Sarpong, Appiah & Amofah, Ofosu & Acheampong, Stephen, 2021. "Marketing performance of service firms: Recognizing market sensing capability and customer interaction orientation," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 7, pages 8-48.
    4. Nurul Choiriah* & Heri Yanto & Rifqi Ilhami, 2018. "Environmental Responsibility of Indonesian Manufacturing Companies," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 122-129:6.
    5. Vanja Grozdić & Branislav Marić & Mladen Radišić & Jarmila Šebestová & Marcin Lis, 2020. "Capital Investments and Manufacturing Firms’ Performance: Panel-Data Analysis," Sustainability, MDPI, vol. 12(4), pages 1-18, February.
    6. Collins Kankam-Kwarteng & Appiah Sarpong & Ofosu Amofah & Stephen Acheampong, 2021. "Marketing performance of service firms: Recognizing market sensing capability and customer interaction orientation," Post-Print hal-03376959, HAL.
    7. Olayiwola Kabirat Abiola & Intan Waheedah Othman, 2022. "Financial Management and Firms' Profitability: Evidence from Nigerian Manufacturing Listed Firms," Business and Economic Research, Macrothink Institute, vol. 12(2), pages 190-201, December.
    8. Simeon Oeta & Richard Kiai & Joseph Muchiri, 2019. "Influence of tax planning on financial performance of manufacturing companies listed at Nairobi Securities Exchange," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 8(6), pages 262-270, October.
    9. Bambang Sutopo & Arum Kusumaningdyah Adiati & Purnama Siddi, 2021. "Is The Higher Debt Level Profitable for State-Owned Enterprises?," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 243-256.
    10. Ummay Mahima Ima & Nurun Nahar, 2022. "Impact of Firm Specific Factors on Profitability: Evidence from the Engineering Industry of Bangladesh," International Journal of Science and Business, IJSAB International, vol. 13(1), pages 100-106.
    11. Akhmadi & Siti Epa Hardiyanti, 2020. "How to Attract Attention of Investors Through Dividend Policy on the Consumer Goods Industries?," International Journal of Business and Economic Affairs (IJBEA), Sana N. Maswadeh, vol. 5(1), pages 23-29.
    12. Joy Pandapotan & Noegrahini Lastiningsih, 2020. "The Effect of Capital Structure, Liquidity, and Company Size towards Profitability," Journal of Economics and Behavioral Studies, AMH International, vol. 12(4), pages 59-66.

    More about this item

    Keywords

    Leverage; Firm Size; Profitability;
    All these keywords.

    JEL classification:

    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ1:2016-02-6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.