Financial performance in the Indonesian manufacturing sector is heavily influenced by how effectively firms manage their assets and capital structures, though profit growth does not necessarily moderate these relationships. This research, conducted by Rachmania Syifa and Maiyaliza from Swadaya Gunung Jati University in 2026, examines the factors affecting Return on Assets (ROA) in manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the 2022–2024 period.
The manufacturing sector remains a cornerstone of Indonesia’s economy, serving as a primary driver for industrial growth and employment. As global economic competition intensifies, companies must manage resources with high efficiency to ensure long-term sustainability. Profitability, measured by ROA, serves as a critical benchmark for evaluating a business's operational success. This study investigates how asset utilization efficiency—measured by Total Asset Turnover (TATO)—and capital structure—measured by the Debt to Equity Ratio (DER)—impact ROA, while testing whether profit growth acts as a moderating factor.
The study employs a quantitative, associative methodology using secondary data derived from the financial statements of manufacturing firms listed on the IDX from 2022 to 2024. Through purposive sampling, the researchers compiled a dataset consisting of 78 observations. The data were processed using multiple regression analysis and Moderated Regression Analysis (MRA) via statistical software to test the relationships between these financial variables.
Key findings from the research indicate:
- Asset Efficiency: Total Asset Turnover (TATO) has a positive and significant effect on ROA, demonstrating that higher efficiency in converting assets into sales directly boosts company profitability.
- Capital Structure: The Debt to Equity Ratio (DER) shows a negative and significant impact on ROA, suggesting that excessive reliance on debt reduces profitability due to the burden of interest expenses.
- Moderating Role: Profit growth does not significantly moderate the relationship between TATO or DER and ROA.
These results suggest that asset efficiency and leverage levels are primary determinants of profitability regardless of a firm's current profit growth trajectory. The researchers recommend that companies prioritize optimizing asset utilization and managing capital structures carefully to avoid financial risks that could undermine performance. For investors, TATO and DER remain essential indicators when assessing potential investments in the manufacturing sector.
Author Profile: This research was authored by Rachmania Syifa and Maiyaliza, faculty members at the Faculty of Economics and Business, Swadaya Gunung Jati University, specializing in financial management and corporate financial analysis.
Research Source:
- Article Title: The Effect of Debt to Equity Ratio and Total Asset Turnover on Return on Assets with Profit Growth as a Moderating Variable in the Manufacturing Sector Listed on the Indonesia Stock Exchanged
- Journal Name: Indonesian Journal of Business Analytics (IJBA)
- Publication Year: 2026
- DOI/URL:
https://doi.org/10.55927/ijba.v6i3.16500
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