The Effect of Dividend Policy, Leverage, Firm Size, Profit Growth, and Inventory Turnover on Firm Value at PT Nippon Indosari Corporindo Tbk (ROTI) During the Period 2012-2024

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Banten– Leverage and Firm Size Significantly Influence ROTI’s Firm Value, Study Finds. The research was conducted by Rosita and Wirawan Suryanto from Universitas Pamulang and published in the International Journal of Education and Life Sciences (IJELS) Vol. 4 No. 2 (February 2026

Research conducted by Rosita and Wirawan Suryanto shows that leverage and company size are the most influential factors on company value, while dividend policy, profit growth, and inventory turnover have no significant partial effect.

Stock Price Decline Since 2020

According to the stock price chart presented on page 200, ROTI’s share price peaked at IDR 3,300 in 2012 but declined steadily in recent years, reaching IDR 970 in 2024. The downward trend coincided with fluctuations in profitability, liabilities, and inventory levels.

Financial data summarized in Table 1 (page 201) show:

Highest net profit: IDR 432.22 billion (2022)
Highest total liabilities: IDR 1.739 trillion (2017)
Highest total assets: IDR 4.682 trillion (2019)
Highest inventory level: IDR 156.864 billion (2024)

The study notes an inverse relationship between rising liabilities and net income in several years.

Measuring Firm Value with PBV

Firm value in this study was measured using Price to Book Value (PBV). Based on Table 2 (page 205), PBV ranged from:

Maximum: 25.06 (2012)
Minimum: 2.55 (2018)
Average: 5.539

Descriptive statistics in Table 3 (page 205) show 13 years of observations (2012–2024), providing a comprehensive time-series dataset.

Regression Results: Two Key Drivers

The multiple regression analysis (Table 8, page 207) produced the following equation:

Y = 260.687 + 0.920X₁ − 11.092X₂ − 16.824X₃ + 0.288X₄ + 0.229X₅

Where:

X₁ = Dividend Policy (DPR)
X₂ = Leverage (DER)
X₃ = Firm Size
X₄ = Profit Growth
X₅ = Inventory Turnover

Key Findings (Partial t-test, page 209):

Dividend Policy (DPR) – Not significant (p = 0.715)
Leverage (DER) – Significant negative effect (p = 0.002)
Firm Size – Significant negative effect (p = 0.000)
Profit Growth – Not significant (p = 0.862)
Inventory Turnover – Not significant (p = 0.290)

Leverage shows a strong negative coefficient (-11.092), indicating that higher debt levels significantly reduce firm value. Similarly, firm size carries a negative coefficient (-16.824), suggesting that asset expansion without proportional performance may lower market valuation.

Simultaneous Effect Is Strong

Although three variables were not significant individually, the simultaneous F-test (Table 10, page 209) shows:

F-count: 28.268
F-table: 4.387
Significance: 0.000

This means all five variables together significantly influence firm value.

The coefficient of determination (Table 11, page 210) shows:

R Square = 0.953

This indicates that 95.3% of variations in firm value are explained by the five financial variables studied. Only 4.7% is influenced by other factors.

What This Means for Investors

The findings highlight two major insights:

1. Debt Management Is Critical

Higher leverage significantly reduces firm value. Investors should monitor the Debt to Equity Ratio (DER) closely.

2. Bigger Is Not Always Better

Firm size negatively affects firm value in this case. Asset growth without efficient management may weaken market perception.

Dividend policy and profit growth did not significantly influence PBV during the observed period, suggesting that market valuation may respond more strongly to capital structure decisions than to dividend distribution.

Recommendations

The researchers suggest:

Companies should reduce excessive debt levels.
Asset utilization should be optimized to improve efficiency.
Investors should diversify portfolios to mitigate risks.
Future research should incorporate macroeconomic factors such as inflation and interest rates.

Conclusion

Between 2012 and 2024, leverage and firm size emerged as the dominant determinants of PT Nippon Indosari Corporindo Tbk’s firm value. While dividend policy, profit growth, and inventory turnover showed no partial significance, the combined financial indicators strongly influence company valuation.

The study reinforces the importance of prudent capital structure management and strategic asset utilization in sustaining long-term firm value.

Author Profiles

Rosita- Universitas Pamulang
Wirawan Suryanto- Universitas Pamulang

Research Source

Rosita & Suryanto, W. (2026). The Effect of Dividend Policy, Leverage, Firm Size, Profit Growth, and Inventory Turnover on Firm Value at PT Nippon Indosari Corporindo Tbk (ROTI) During the Period 2012–2024. International Journal of Education and Life Sciences (IJELS), Vol. 4 No. 2, 199–214.

DOI: https://doi.org/10.59890/ijels.v4i2.280

URL: https://ntlmultitechpublisher.my.id/index.php/ijels