Helda Fajriani, Jeni Irnawati

The Influence of Current Ratio and Return on Equity on Stock Prices in the Company Pt Adaro Energy Indonesia Tbk Period (2013-2022)

Introduction

The influence of current ratio and return on equity on stock prices in the company pt adaro energy indonesia tbk period (2013-2022). Study on Current Ratio & Return on Equity's influence on PT Adaro Energy Indonesia Tbk stock prices (2013-2022). ROE significantly impacts price, Current Ratio does not. Both combined are significant.

Abstract

Finding out how return on equity and the current ratio impact stock prices is the aim of this research. The profitability and liquidity ratios, as determined by the current ratio and return on equity, respectively, are the study's independent variables, while the stock price is its dependent variable. A quantitative research approach is used in this investigation. The population and sample for the research were drawn from the 2013–2022 annual financial analysis report of PT Adaro Energy Indonesia Tbk. Descriptive statistical tests, multiple linear regression analysis, coefficient of determination tests, conventional assumption tests (autocorrelation, heteroscedasticity, multicollinearity, and normality tests), and hypothesis tests (T-tests and F-tests) are among the data analysis methods that are performed using the IBM SPSS Statistic Version 26 software. The study's findings indicate that although return on equity has a significant influence on stock price, the current ratio has no effect at all. At the same time, stock price are significantly impacted by the current ratio and return on equity. According to the results of the coefficient of determination test, the dependent variable stock price is explained by the current ratio and return on equity in 89.1% of cases, with the remaining 10.9% resulting from variables not included in this study. The R square value is 0.891.

Review

This study meticulously investigates the impact of two crucial financial ratios, Current Ratio (CR) and Return on Equity (ROE), on the stock prices of PT Adaro Energy Indonesia Tbk over a specific period from 2013 to 2022. The research clearly articulates its objective: to determine how these liquidity and profitability indicators, respectively, serve as independent variables influencing stock price, the dependent variable. By focusing on a single, prominent company within the Indonesian energy sector, the study provides a detailed, firm-specific analysis, contributing to an understanding of internal financial dynamics on market valuation for this particular entity. Employing a robust quantitative research approach, the authors utilized annual financial data and a comprehensive suite of statistical analyses via IBM SPSS Statistic Version 26. The methodology included descriptive statistics, multiple linear regression, coefficient of determination tests, and essential conventional assumption tests (autocorrelation, heteroscedasticity, multicollinearity, and normality), alongside T-tests and F-tests for hypothesis evaluation. The findings reveal that Return on Equity individually exerts a significant influence on stock prices, which aligns with expectations given ROE's reflection of management efficiency in generating profits. However, the Current Ratio, despite being a key liquidity metric, was found to have no individual effect on stock prices. Intriguingly, the study concurrently reports a significant combined impact of both Current Ratio and Return on Equity on stock prices, implying that while CR might not be individually significant, its presence within the model collectively contributes to the overall explanatory power, which is notably high at 89.1% (R-squared = 0.891). The research provides valuable insights into the specific drivers of stock prices for PT Adaro Energy Indonesia Tbk, highlighting the strong relevance of profitability (ROE) for investor perception. The high coefficient of determination suggests that the model, incorporating these two ratios, is highly effective in explaining stock price movements for the company during the observed period. However, the study's single-company focus inherently limits the generalizability of its findings to other firms or industries. Future research could benefit from extending the analysis to a panel data setting involving multiple companies within the energy sector or incorporating additional external variables (e.g., commodity prices, macroeconomic indicators, market sentiment) to account for the remaining 10.9% of unexplained variation, thus offering a more holistic view of stock price determinants.

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