Bagus Yohan Irnando, Febrian Eko Saputra

AN EMPIRICAL ANALYSIS OF THE IMPACT OF CURRENT RATIO AND DEBT-TO-EQUITY RATIO ON RETURN ON ASSETS: EVIDENCE FROM PT BEKASI FAJAR INDUSTRIAL ESTATE TBK (2022-2024)

Introduction

An empirical analysis of the impact of current ratio and debt-to-equity ratio on return on assets: evidence from pt bekasi fajar industrial estate tbk (2022-2024). Investigate Current Ratio & Debt-to-Equity Ratio impact on Return on Assets at PT Bekasi Fajar Industrial Estate Tbk (2022-2024). Empirical analysis finds no significant effect on profitability.

Abstract

This research investigates the relationship between the Current Ratio (CR), Debt-to-Equity Ratio (DER), and Return on Assets (ROA) at PT Bekasi Fajar Industrial Estate Tbk throughout the 2022–2024 period. The study was motivated by post-pandemic financial performance fluctuations that emphasize the necessity of assessing liquidity and capital structure to determine their impact on profitability. A quantitative approach was applied using multiple linear regression analysis. The dataset comprised secondary information drawn from the company’s annual financial statements, which were retrieved from the official website of the Indonesia Stock Exchange (IDX). The findings reveal that the significance values of the Current Ratio (0.696) and the Debt-to-Equity Ratio (0.390) exceeded the 0.05 threshold, implying that neither variable individually affects Return on Assets (ROA) in a statistically significant manner. The F-test result of 0.581 (>0.05) indicates that both variables collectively exert no significant influence on ROA. The coefficient of determination (R²) value of 0.114 suggests that these two independent variables jointly explain only 11.4% of the variation in ROA, while the remaining 88.6% is attributed to other factors not examined in this study.

Review

This paper, "AN EMPIRICAL ANALYSIS OF THE IMPACT OF CURRENT RATIO AND DEBT-TO-EQUITY RATIO ON RETURN ON ASSETS: EVIDENCE FROM PT BEKASI FAJAR INDUSTRIAL ESTATE TBK (2022-2024)," addresses a relevant topic in corporate finance: the relationship between key financial ratios and profitability. The authors investigate the impact of the Current Ratio (CR) and Debt-to-Equity Ratio (DER) on Return on Assets (ROA) specifically within PT Bekasi Fajar Industrial Estate Tbk. The motivation, stemming from post-pandemic financial performance fluctuations, is well-articulated, highlighting the necessity of assessing liquidity and capital structure in the current economic landscape. The application of a quantitative approach using multiple linear regression on secondary data from the IDX is a standard and appropriate methodology for this type of analysis. The study's findings are clearly presented and offer specific insights, albeit with largely non-significant results. The research indicates that neither the Current Ratio (p=0.696) nor the Debt-to-Equity Ratio (p=0.390) individually demonstrate a statistically significant effect on ROA for the company during the 2022-2024 period. This lack of individual significance is further corroborated by the F-test (p=0.581), which concludes that both variables collectively also do not exert a significant influence on ROA. A notable finding is the low coefficient of determination (R² = 0.114), suggesting that CR and DER jointly explain only 11.4% of the variation in ROA, leaving a substantial 88.6% unexplained by these two independent variables. These results are valuable in challenging potential assumptions about the direct and immediate impact of these specific ratios on profitability within the focused context. While the study is methodologically sound for its stated scope, its primary limitation lies in its extremely narrow focus: a single company over a very short three-year period. This significantly constrains the generalizability of the findings, making it difficult to draw broader conclusions about financial ratios in other companies or industries, or across longer economic cycles. Future research would greatly benefit from expanding the empirical analysis to include a larger sample of companies, perhaps within the industrial estate sector or a comparable industry, and extending the time horizon to capture more robust trends and mitigate period-specific anomalies. Additionally, exploring other potential determinants of ROA, such as operational efficiency, asset turnover, sales growth, management quality, or macroeconomic factors, could help explain the substantial unexplained variance and offer a more comprehensive understanding of the drivers of profitability.

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