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THE IMPACT OF LIQUIDITY, CAPITAL STRUCTURE, PROFIT MARGIN, AND FIRMS SIZE ON THE FINANCIAL PERFORMANCE

( Study in Consumer Goods Sector in Go Public Company on The Indonesian Stock Exchange for The Period 2015-2019)

UNDERGRADUATE THESIS

Submitted to Fulfill Tasks and Conditions to Obtain an Economics Bachelor of Double Degree Management Programs at the Faculty of Economics and Business

Muhammadiyah University of Surakarta

Arranged by:

Reza Agus Herdayanti

B 100 164 003

FACULTY OF ECONOMICS AND BUSINESS

MUHAMMADIYAH UNIVERSITY OF SURAKARTA

2021

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PAGE OF AGREEMENT

THE IMPACT OF LIQUIDITY, CAPITAL STRUCTURE, PROFIT MARGIN,

AND FIRMS SIZE ON THE FINANCIAL PERFORMANCE

(Study in Consumer Goods Sector in Go Public Company on The Indonesian

Stock Exchange for The Period 2015-2019)

Written by:

REZA AGUS HERDAYANTI

B100164003

Research has been accepted and approved

Thesis Supervisor,

Imronudin, SE., MSi., PhD

(NIDN: 0617036902

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MOTTO

Q.S. Al-Insyirah ( 5-6 )

For indeed, with hardship (will be) ease. Indeed, with hardship

(Will be) ease.

All our dreams can come true if we have the courage to pursue them.

Walt Disney

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DEDICATION

This research is done with love and patience from the bottom of my heart, and I

dedicate my hard work to:

1. Allah SWT, with all of His graces, to grant the strength for the researchers to

accomplish this thesis.

2. Sholawat and Salam be poured out for Rasulullah SAW, his family, and his

friends at all times.

3. As a supervisor, Mr. Imronudin, SE., M.Si., Ph.D. has guided, motivated, and

supported me throughout the process of writing my final project.

4. Mrs. Soepatini, SE. M.Si., Ph.D. as secretary of international management

program and also my lecturer who help and share the knowledge while study in

college.

5. My beloved family, my father Agus Waluyo, my mother Ni Putu Sugiari, my

brother Arizal Agus Hartawan. Thank you for always remembering me in your

prayers and for allowing me to pursue my aspirations no matter what and for

their endless supports in everything.

6. Thank you for the assistance and support of the Economics and Business

Faculty of Muhammadiyah University of Surakarta's particularly those in the

Management double degree study program lecturers and employees.

7. For all of my dearest friends, Chrisma Mia, Nelvia, Nazala, Ayu, Atin, Sari,

Fira, and also all my friends in Taiwan who have always been there to

supporting me and have already stepped in to help me finish my final

assignment.

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ACKNOWLEDGE

Assalamualaikum Warrahmatullahi Wabarakatuh,

My deepest gratitude goes to Allah SWT, for all His Blessings and

mercies so finally, so the author can finish the final project assignment and

completes the study at Management Double Degree Program in Faculty of

Economics and Business, Muhammadiyah University of Surakarta. May sholawat

and salam always be with our best prophet Muhammad SAW, who has guided us

to know and do the right thing to live in this world namely Islam, the religion

which guides mercy to all worlds.

The author would like to thank the honorable:

1. Dr. H. Sofyan Anif, M.Si, Rector of Muhammadiyah University of

Surakarta, and all Muhammadiyah University of Surakarta rectorat

leaders.

2. Prof. Dr. Anton Agus Setyawan, S.E., M.Si., as a Dean of the Faculty of

Economics and Business, Muhammadiyah University of Surakarta.

3. Mr. Imronudin, SE. M.Si., Ph.D., as a supervisor who has granted

permission to the author to do this final project. The author successfully

completes this thesis with the help of his supervisors, who kindly provide

her time, direction, and guidance.

4. Mrs. Soepatini, SE. M.Si., Ph.D. as secretary of international management

program.

5. All lecturers and employees of the Faculty of Economics and Business,

Muhammadiyah University of Surakarta, particularly those in the

Management double degree study program, who are willing to guide and

transmit their knowledge to students and have assisted them in academic

and administrative matters.

6. Both of my parents, who are always there for me and provide me with

motivation, love, and everlasting prayers,

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7. For all of my dearest friends, who have always been there to supporting

me and have already stepped in to help me finish my final assignment.

The author recognizes that there are still flaws in the study paper's

preparation. As a result, the authors welcome comments and criticisms in order

to improve this study paper. Finally, the authors anticipate that this research

work will be beneficial to all parties involved.

Wassalamu’alaikum Warrahmatullahi Wabarakatuh

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The Impact of Liquidity, Capital Structure, Profit Margin, and Firms Size on The Financial Performance (Study in Consumer goods sector in Go Public Company on The Indonesian Stock Exchange for The Period 2015-2019)

ABSTRACT

This research aimed to analyze the effect of Current Ratio, Quick Ratio, Debt to

Equity Ratio, Net Profit Margin, and Firm Size on Financial Performance

(Return on Equity) in Indonesia. In this study, a total sample of 14 companies in

Consumer Goods Industry and the data sources in this study are secondary data

methods based on the annual financial reports of consumer goods industry in

Indonesia listed on the Indonesia Stock Exchange for the period 2015 to 2019.

The analysis of the data used is multiple linear regression tests to determine the

effect of Current Ratio, Quick Ratio, Debt to Equity Ratio, Net Profit Margin,

and Firm Size on Return on Equity. The results show that Net Profit Margin

partially has significant effect on Return On Equity. Meanwhile, Current Ratio,

Quick Ratio, Debt to Equity Ratio and Firm Size partially has no significant

effect on Return On Equity.

Keywords: Liquidity Ratio, Capital Structure, Net Profit Margin, Firm Size,

Return on Equity

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TABLE OF CONTENTS

RESEARCH COVER

PAGE OF AGREEMENT .................................................................................... i

APPROVAL PAGE ............................................................................................. ii

DECLARATION OF AUTHENTICITY ........................................................... iii

MOTTO .............................................................................................................. iv

DEDICATION ......................................................................................................v

ACKNOWLEDGEMENT .................................................................................. vi

ABSTRACT ...................................................................................................... viii

TABLE OF CONTENTS .................................................................................... ix

LIST OF TABLES ................................................................................... xii

APPENDIX LIST .................................................................................. xiii

CHAPTER 1 INTRODUCTION ..........................................................................1

A. Background of Study ..................................................................................1

B. Problem Statements ...................................................................................3

C. Benefits of the Research ............................................................................4

D. Scope and Limitation of the Research ........................................................4

CHAPTER 2 REVIEW OF LITERATURE ............................................................5

A. Theoretical Frameworks .............................................................................5

2.1 Liquidity ..............................................................................................5

2.1.1 Definitions of Liquidity ................................................................5

2.1.2 The Objectives and Benefits of Liquidity Ratio ............................6

2.1.3 Types of Liquidity Ratios .............................................................7

2.2 Capital Structure ...................................................................................8

2.2.1 Definitions of Capital Structure ....................................................8

2.2.2 Types of Capital Structure ..........................................................9

2.2.3 Benefits of Capital Structure .......................................................10

2.3 Net Profit Margin ...............................................................................10

2.3.1 Definitions of Net Profit Margin .................................................10

2.4 Company Size ....................................................................................11

2.4.1 Definitions of Company Size ......................................................11

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2.5 Financial Performance .......................................................................12

2.5.1 Definitions of Financial Performance .........................................12

B. HPOTHESES DEVELOMPMENTS ...........................................................13

CHAPTER 3 RESEARCH METODOLOGY ...................................................19

A. Place and Time Research ............................................................................19

B. Research Variable ........................................................................................19

a. Dependent Variable ..........................................................................19

b. Independent Variable .......................................................................19

C. Research Method .........................................................................................21

D. Research Populations and Samples .............................................................21

E. Data Collection Methods .............................................................................23

a. Documentation ..................................................................................23

b. Library Studies ..................................................................................23

F. Data Analysis Techniques ...........................................................................24

Classical Assumptions Test .......................................................................24

a. Normality Test ..................................................................................24

b. Multicollinearity Test........................................................................24

c. Heteroscedasticity Test .....................................................................25

d. Autocorrelation Test .........................................................................25

Multiple Regression Analysis Test ............................................................25

a. The Coefficient of Determination (R) Test .......................................26

b. Simultaneous Test (f-test) .................................................................26

c. Partial Test (t-test).............................................................................26

CHAPTER 4 RESEARCH RESULTS AND DISCUSSION ...........................27

A. Research Results ..........................................................................................27

B. Descriptive Statistics ...................................................................................27

C. Testing Result ..............................................................................................30

1. Classical Assumption Test .....................................................................30

a. Normality test ...............................................................................30

b. Multicollinearity test ....................................................................31

c. Heteroscedasticity test ..................................................................32

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d. Autocorrelation test ......................................................................34

2. Multiple Linear Regression Analysis Test Results ................................35

a. f-test Results (Simultaneous) ............................................................36

b. t-test Results (Partial) or Hypothesis Test ........................................37

c. R2 Test Results (Determination) .......................................................38

D. Discussions ..................................................................................................39

1. Effect of Current Ratio On Return on Equity ...................................40

2. Effect between Quick Ratio and Return on Equity ...........................40

3. Effect between Debt to Equity Ratio and Return on Equity .............41

4. Effect between Net Profit Margin and Return on Equity ................43

5. Effect between Company Size and Return on Equity .......................43

CHAPTER 5 CONCLUSIONS AND SUGGESTIONS ..................................44

A. Conclusions ..............................................................................................44

B. Suggestions ..............................................................................................44

1. For Company.....................................................................................44

2. For Researchers .................................................................................45

REFERENCES ...................................................................................................46

APPENDIX .........................................................................................................49

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LIST OF TABLES

Table 3.1 Sample Criteria .........................................................................................................22

Table 3.2 List name of companies ............................................................................................23

Table 4.1 Descriptive Statistics ................................................................................................28

Table 4.2 One-Sample Kolmogorov-Smirnov Test ..................................................................31

Table 4.3 Coefficients ...............................................................................................................31

Table 4.4 Heteroscedasticity Test .............................................................................................33

Table 4.5 Model Summary .......................................................................................................34

Table 4.6 Results of the multiple regression tests ....................................................................35

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APPENDIX LIST

ATTACHMENT 1 .........................................................................................................................46

ATTACHMENT 2 ........................................................................................................................47

ATTACHMENT 3 .........................................................................................................................48

ATTACHMENT 4 .........................................................................................................................49

ATTACHMENT 5 .........................................................................................................................50

ATTACHMENT 6 .........................................................................................................................51

ATTACHMENT 7 .........................................................................................................................52

ATTACHMENT 9 .........................................................................................................................53