Influence of Liquidity Ratio, Solvency Ratio, and Activity Ratio on Profitability Ratio

Abstract

Manufacturing companies listed on the Indonesia Stock Exchange (IDX) are the most important contributors of information for investors, especially regarding information on financial ratios to financial performance. The purpose of this study is to determine the influence of liquidity ratio, solvency ratio, and activity ratio on the financial performance of companies (a case study on manufacturing companies in the chemical sub-sector listed on the Indonesia Stock Exchange (IDX) for the period 2019-2023). The quantitative method was used for this research. The population in this study consists of 17 companies in the chemical sub-sector listed on the Indonesia Stock Exchange (IDX), with a purposive sampling technique used to obtain 5 sample companies. Data was tested using IBM SPSS software version 25. The results of this study show that the results of the t-test (partial) on the Current Ratio (CR) with the t-> ttable calculation (3,878 > 1.66055) with a significance level (0.000 < 0.05), the Debt to Asset Ratio (DAR) with the t-table > calculation (2,217 < 1.66055) with the significance level (0.029 > 0.05) while the Total Asset Turnover (TATO) with the calculation of < ttable (1,355 < 1.66055) and its significance value (0.179 < 0.05) and obtained the results of the F test (simultaneous) that the Current Ratio (CR), Debt to Asset Ratio (DAR) and Total Asset Turnover (TATO) obtained the value of (5,587 > 2.47) and the significance value (0.001 < 0.05). The conclusions obtained show that the results of the t-test (partial) that Current Ratio (CR) and debt to Asset Ratio (DAR) have a positive and significant influence on Return on Asset (ROA) while Total Asset Turnover (TATO) partially does not affect Return on Asset (ROA). Simultaneously, the Current Ratio (CR), Debt to Asset Ratio (DAR), and Total Asset Turnover (TATO) affect the Return on Asset (ROA).