FACTORS THAT INFLUENCE PROFITABILITY (CASE IN MANUFACTURING COMPANIES LISTED IN THE INDONESIA STOCK EXCHANGE FROM 2014-2017)

Abstract

Every company usually have the same goal at the beginning a company was built, which is to be able to develop and capability to do business. One way is to manage the financial performance of the company. The analysis of financial statements by the company can determine the level of profitability or profitability ratio, which is to show the company's ability to generate profits for a certain period. This research was conducted to find out factors that influence profitability proxied with return on equity using 123 manufacturing companies that have been listed on Indonesia stock exchange from 2014–2017 as a population and with purposive sampling, the total sample used to analyze are 69 companies. The statistical methods used in this research are descriptive statistics, correlation analysis, multiple regression analysis, and interaction analysis. The result of this research shows that liquidity ratio proxied with current ratio and leverage ratio proxied with debt to equity ratio has a negative effect on profitability, while rentability ratio proxied with gross profit margin has a positive effect on profitability. Simultaneously, all independent variables have a positive effect on profitability. Another result is there is an interaction between liquidity ratio and rentability ratio that have an effect on profitability.