Azriel Aulia Rahman and Hakiman Thamrin from the Faculty of Economics and Business, Universitas Mercu Buana, examined the effect of liquidity, capital structure, and profitability on the market value of consumer non-cyclicals sector companies listed on the Indonesia Stock Exchange (IDX) during the 2019–2024 period. This research is crucial to help investors evaluate corporate fundamentals and guide corporate managers in making financial decisions amidst market dynamics.
Although Indonesian household consumption dominated Gross Domestic Product (GDP) with a contribution of over 54% in 2024, the average firm value—measured via Price to Book Value (PBV)—in the consumer non-cyclicals sector actually declined from 3.66 in 2019 to 3.17 in 2024. This phenomenon indicates that macroeconomic growth does not automatically boost market valuations, making a company's internal financial performance the primary determinant.
The study applied a quantitative causal approach by analyzing the annual financial reports of 25 selected issuers on the IDX. Data testing was conducted using panel data regression to determine how strongly financial variables explain changes in firm value.
The analysis results reveal several key findings:
- Liquidity (Current Ratio) Exerts a Positive Effect: High liquidity levels strengthen investor confidence by demonstrating the company's ability to settle short-term obligations, supported by a t-statistic of 10.54 and a probability of 0.0000.
- Capital Structure (DER) Is Insignificant: The debt-to-equity ratio has no direct impact on firm value (probability of 0.4747), indicating that investors focus more on operational stability rather than debt financing composition.
- Profitability (Return on Equity) Exerts a Positive Effect: Management's ability to generate net income from shareholders' equity boosts market value with a t-statistic of 2.30 and a probability of 0.0233.
- Collectively, these three financial indicators explain 86.04% of the variation in firm value on the stock exchange.
The implications of this research provide strategic guidance for the business world and the capital market. Azriel Aulia Rahman and Hakiman Thamrin from Universitas Mercu Buana emphasized that these findings can serve as a consideration for corporate managers in formulating financial policies as well as a reference for investors in assessing corporate fundamentals before investing. Business actors are encouraged to focus more on maintaining cash health and profit acquisition efficiency to attract market interest.
Author Profiles:
- Azriel Aulia Rahman: Undergraduate Student, Management Study Program, Faculty of Economics and Business, Universitas Mercu Buana.
- Hakiman Thamrin: Lecturer and Researcher, Management Study Program, Faculty of Economics and Business, Universitas Mercu Buana.
Research Source:
- Article Title: The Effect of Current Ratio, Debt to Equity Ratio, and Return on Equity to Price to Book Value (A Study of the Consumer Non-Cyclicals Sector Listed on the Indonesia Stock Exchange for the 2019-2024 Period)
- Journal Name: Contemporary Journal of Applied Sciences (CJAS), Vol. 4, No. 8, August 2026
- DOI:
https://doi.org/10.55927/cjas.v4i8.221
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