Analysis of The Effect of Financial Ratios On Profit Growth In Real Estate Companies Listed On The Indonesian Stock Exchage

Abstract

This study aims to examine the effect of financial ratios on the profit growth of property companies. The ratios used in this study include the Current Ratio (CR) as an indicator of liquidity, fixed asset turnover as an indicator of activity, Return on Assets (ROA) as an indicator of profitability, and Debt to Asset Ratio (DAR) as an indicator of solvency. The research was conducted using a quantitative approach with data from annual financial reports of several property companies over a specific period. The analysis results indicate that CR does not have a significant effect on profit growth, suggesting that a company's liquidity level does not directly drive profit increases. Fixed asset turnover also does not have a significant effect on profit growth, as fixed assets are not always optimally utilized to increase company profits. Meanwhile, ROA has been proven to have a positive and significant effect on profit growth, indicating that the higher a company's effectiveness in utilizing its assets, the greater the potential for profit growth. Conversely, DAR does not show a significant effect on profit growth, indicating that the debt-to-asset ratio is not the primary determinant of profit growth for the company. These findings are expected to contribute to managerial decision-making and investment considerations in the property sector.