Analysis Of The Effect Of Current Ratio (CR), Longterm Debt Equity Ratio (LTDER), Total Asset Turnover (TATO) And Return On Assets (ROA) On Stock Prices In Real Estate And Property Companies Listed In The BEI In 2010-2012

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Analysis of the Effect of Financial Ratios on the Stock Prices of Real Estate and Property Companies on the IDX in 2010-2012

Introduction

Investing in the stock market can be a complex and challenging task, especially when it comes to understanding the factors that affect a company's stock prices. In this context, this article will discuss the effect of several financial ratios, namely the current ratio (CR), the Longterm Debt Equity Ratio (LTDER), Total Asset Turnover (TATO), and Return on Assets (ROA), against the share price of real estate companies and Property listed on the Indonesia Stock Exchange (IDX) during the period 2010 to 2012.

Understanding the relationship between financial ratios and stock prices is crucial for investors who want to make informed decisions about their investments. By analyzing the effect of these financial ratios, investors can gain valuable insights into the company's performance and make more informed decisions about their investments.

Research Background

This study aims to determine the extent to which financial ratios affect stock prices in real estate and property companies on the IDX. With a quantitative approach and using multiple linear regression analysis techniques, this study analyzes secondary data taken from the company's financial statements and other related sources. Of the total 34 registered companies, as many as 22 companies became research samples using the purposive sampling method.

The research background of this study is based on the importance of financial ratios in assessing a company's performance. Financial ratios are used to evaluate a company's liquidity, profitability, efficiency, and solvency. By analyzing these financial ratios, investors can gain insights into the company's ability to manage its finances, generate profits, and maintain its solvency.

Research Methods

The data used in this study is secondary data. The first author collects data from the financial statements issued by the company and information from the relevant website. The independent variables studied include the financial ratio of Current Ratio (CR), Longterm Debt Equity Ratio (LTDER), Total Asset Turnover (TATO), and Return on Assets (ROA). While the dependent variable studied is the company's stock price.

The research methods used in this study are based on the quantitative approach, which involves the use of statistical analysis to analyze the data. The multiple linear regression analysis technique is used to analyze the relationship between the independent variables and the dependent variable.

Research Results

The results showed that partially, the Current Ratio (CR) variable, Longterm Debt Equity Ratio (LTDER), and Total Asset Turnover (TATO) did not have a significant effect on the share price of real estate and property companies listed on the IDX. However, when examined simultaneously, there is evidence that the four financial ratios, including Return on Assets (ROA), have a significant influence on stock prices.

The research results of this study indicate that the financial ratios have a significant effect on stock prices, but the effect is not uniform across all financial ratios. The Current Ratio (CR), Longterm Debt Equity Ratio (LTDER), and Total Asset Turnover (TATO) did not have a significant effect on stock prices, but the Return on Assets (ROA) had a significant effect.

Analysis and Explanation

Current Ratio (CR)

Current Ratio (CR) is a ratio that measures the company's ability to fulfill its short-term obligations. Although CR is important in assessing company liquidity, in the context of this study, a high CR value does not necessarily guarantee an increase in stock prices. This could be because investors consider more other factors such as profitability and future growth of the company.

The Current Ratio (CR) is an important financial ratio that measures a company's ability to meet its short-term obligations. A high CR value indicates that the company has sufficient liquid assets to meet its short-term obligations, but it does not necessarily guarantee an increase in stock prices. Investors consider more other factors such as profitability and future growth of the company.

Longterm Debt Equity Ratio (LTDER)

Longterm Debt Equity Ratio (LTDER) illustrates the proportion of the company's long-term debt to equity. This ratio is usually used to assess financial risk. When the LTDER is too high, investors may be skeptical of the company's ability to manage their debt, which has the potential to reduce stock prices.

The Longterm Debt Equity Ratio (LTDER) is an important financial ratio that measures a company's ability to manage its debt. A high LTDER value indicates that the company has a high proportion of long-term debt to equity, which may be a concern for investors. Investors may be skeptical of the company's ability to manage its debt, which has the potential to reduce stock prices.

Total Asset Turnover (TATO)

Total Asset Turnover (TATO) shows how effective the company uses its assets to generate income. Although high tattoos show operational efficiency, the impact on stock prices is not always positive if investors are not sure of the company's strategy or if there are external factors that affect the overall industrial performance.

The Total Asset Turnover (TATO) is an important financial ratio that measures a company's ability to generate income from its assets. A high TATO value indicates that the company is using its assets efficiently, but the impact on stock prices is not always positive. Investors may be concerned about the company's strategy or external factors that affect the overall industrial performance.

Return on Assets (ROA)

Return on Assets (ROA) becomes the main indicator in assessing company profitability. The results showed that ROA had a significant effect on stock prices, indicating that investors were very concerned about the rate of return generated by the company's assets.

The Return on Assets (ROA) is an important financial ratio that measures a company's profitability. A high ROA value indicates that the company is generating a high rate of return from its assets, which is a concern for investors. Investors are very concerned about the rate of return generated by the company's assets, which has a significant effect on stock prices.

Conclusion

Overall, this analysis shows that although some financial ratios have no partial significant effect, the collective influence of the ratios on stock prices is important. Investment in the real estate and property sector requires an in-depth understanding of various financial ratios and how each variable contributes to the company's overall performance. This provides valuable insights for investors who want to make more information related to investment in companies registered on the IDX.

In conclusion, this study provides valuable insights into the effect of financial ratios on stock prices in real estate and property companies listed on the IDX. The study shows that although some financial ratios have no partial significant effect, the collective influence of the ratios on stock prices is important. Investors who want to make informed decisions about their investments in the real estate and property sector should consider the various financial ratios and how each variable contributes to the company's overall performance.

Recommendations

Based on the findings of this study, the following recommendations are made:

  1. Investors should consider the various financial ratios when making investment decisions in the real estate and property sector.
  2. Companies listed on the IDX should provide more detailed financial information to investors, including the financial ratios used in this study.
  3. Further research should be conducted to investigate the effect of other financial ratios on stock prices in real estate and property companies listed on the IDX.

By considering the various financial ratios and how each variable contributes to the company's overall performance, investors can make more informed decisions about their investments in the real estate and property sector.
Q&A: Understanding the Effect of Financial Ratios on Stock Prices in Real Estate and Property Companies

In our previous article, we discussed the effect of financial ratios on stock prices in real estate and property companies listed on the Indonesia Stock Exchange (IDX) during the period 2010-2012. In this article, we will answer some of the most frequently asked questions about the study and its findings.

Q: What are financial ratios, and why are they important in assessing a company's performance?

A: Financial ratios are mathematical expressions that compare a company's financial data to industry averages or benchmarks. They are used to evaluate a company's liquidity, profitability, efficiency, and solvency. Financial ratios are important in assessing a company's performance because they provide insights into the company's ability to manage its finances, generate profits, and maintain its solvency.

Q: What are the four financial ratios studied in this research, and what do they measure?

A: The four financial ratios studied in this research are:

  1. Current Ratio (CR): measures a company's ability to fulfill its short-term obligations.
  2. Longterm Debt Equity Ratio (LTDER): measures a company's ability to manage its debt.
  3. Total Asset Turnover (TATO): measures a company's ability to generate income from its assets.
  4. Return on Assets (ROA): measures a company's profitability.

Q: What were the findings of the study, and what do they mean for investors?

A: The study found that the four financial ratios have a significant effect on stock prices, but the effect is not uniform across all financial ratios. The Current Ratio (CR), Longterm Debt Equity Ratio (LTDER), and Total Asset Turnover (TATO) did not have a significant effect on stock prices, but the Return on Assets (ROA) had a significant effect. This means that investors should consider the Return on Assets (ROA) when making investment decisions in the real estate and property sector.

Q: Why did the study find that the Current Ratio (CR), Longterm Debt Equity Ratio (LTDER), and Total Asset Turnover (TATO) did not have a significant effect on stock prices?

A: The study found that the Current Ratio (CR), Longterm Debt Equity Ratio (LTDER), and Total Asset Turnover (TATO) did not have a significant effect on stock prices because investors consider more other factors such as profitability and future growth of the company. These financial ratios are important in assessing a company's liquidity, profitability, efficiency, and solvency, but they do not necessarily guarantee an increase in stock prices.

Q: What are the implications of the study for investors and companies listed on the IDX?

A: The study has implications for investors and companies listed on the IDX. Investors should consider the various financial ratios when making investment decisions in the real estate and property sector. Companies listed on the IDX should provide more detailed financial information to investors, including the financial ratios used in this study. This will help investors make more informed decisions about their investments and provide companies with a better understanding of their financial performance.

Q: What are the limitations of the study, and what are the areas for future research?

A: The study has several limitations, including the use of secondary data and the limited sample size. Future research should investigate the effect of other financial ratios on stock prices in real estate and property companies listed on the IDX. Additionally, future research should consider the use of primary data and a larger sample size to increase the generalizability of the findings.

Q: What are the conclusions of the study, and what do they mean for the real estate and property sector?

A: The study concludes that the four financial ratios have a significant effect on stock prices, but the effect is not uniform across all financial ratios. The study also concludes that investors should consider the Return on Assets (ROA) when making investment decisions in the real estate and property sector. This has implications for the real estate and property sector, as companies should focus on improving their profitability and return on assets to increase their stock prices.