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Introduction
Introduction
Introduction
The company's financial ratio describes the financial condition and performance
of the company. Good company performance helps management to achieve company
goals. Financial ratio analysis can also show company profiles, economic
characteristics, competitive strategies and operations, financial and investment
characteristics. The company's financial ratio in the company's financial statements
can be seen from the income statement, cash flow statement, balance sheet, and
statement of changes in equity.
The company's financial statements are very beneficial for the community,
investors, shareholders, and management in the decision-making process. In this case,
the investor must have a benchmark to find out whether he invests in the company, he
will get a profit or loss. Because the progress of a company depends on the capital
invested by the investor. so, the company must have a good performance to get the
trust of investors to invest in the company. Financial performance can be measured
using financial ratios that have been set by the company, because financial ratios are
very influential on the level of increase in stock returns.
According to Arista (2012), stock returns are the selling price of shares above the
purchase price. The higher the selling price of shares above the purchase price, the
higher the return obtained by investors. If an investor wants a high return then he must
be willing to bear a higher risk, and vice versa if he wants a low return, the risk to be
borne is also low.
From the research that has been done before, it turns out that there are still
differences in the results of research on the company's financial performance that
affect stock returns in Indonesia. Because not all financial performance has a positive
influence on stock returns. In this study researchers only use financial statement
analysis that can measure the company's financial performance with finance which
consists of liquidity ratios, solvability ratios, activity ratios, profitability ratios and
market ratios to see the financial conditions that occur in the company against stock
returns.
2. Research Question
2. What is the effect of the Profitability Ratio on the stock returns of manufacturing
companies in the Indonesia Stock Exchange?
3. What is the effect of the Liquidity Ratio on the stock returns of manufacturing
companies in the Indonesia Stock Exchange?
4. What is the effect of the Activity Ratio on the stock returns of manufacturing
companies in the Indonesia Stock Exchange?
3.Literature Survey
3.2 investment
Is a capital for the production process for a company for a long time. Investment
is needed to support economic development in Indonesia. The purpose of the
investment is to get a steady income in each period, such as royalties, interest, rent,
and others whose income can be used for living needs.
3.3 Shares
Stock can be used as a long-term savings. short-term stock movements such as 1 or 2
years, giving a fairly high increase and decrease. The capital gain will be given by the
company to the shareholders as a result of the difference between the purchase price
and the selling price of the stock. The better the company's performance, the higher
the stock price. the share profits can be obtained within one hour, one day, one month,
one year or even several years. It all depends on when we buy, what stock we will buy,
and when we will sell it.
1. Profitability Ratio
Shows the company's ability to generate gross profit that can be achieved from each
sale. Gross profit margin is a comparison of gross profit and sales in the same period.
The greater the calculation results indicate the better the financial condition of the
company.
Profit margin
Asset returns show efficiency where management has used available resources to
generate income.
calculate the percentage rate of return obtained from ordinary shareholder investments
2. Liquidity Ratio
The liquidity ratio shows the ability of a company to meet its short-term financial
obligations, such as paying salaries, maturing debts, operating costs, and others.
Current Ratio
This ratio shows the comparison of current assets with current liabilities. The higher it
means the better the liquidity.
Quick ratio
Quickratio=cash+marketablesecurities+accountreceivable/current asset
3. Activity Ratio
4. Leverage Ratio
indicates the company's ability to fulfill all its obligations both long and short term if
the company is liquidated.
Debt Ratio.shows a percentage analysis of the total value obtained from creditors.
The debt Equity ratio is a significant easure of solvency since a high degree of
debt in the capital structure may make it difficult for the company
4 financial ratios are used to explain the strengths and weaknesses of the company's
financial condition and for predict stock returns in the capital market.
All investment decisions, including stock investments are the decision to invest a
number of funds in the hope of obtaining profits or returns in the future, these benefits
can take the form of cash receipts or an increase in investment value.
4.Research Design
The source of information in this article comes from journals, financial management
books, economic finance articles, and other online information.if we want to prove the
influence of corporate financial ratios on stock returns, we must analyze the
company's ratio by attaching the financial statement to the company, and then make a
decision .
5.List of Literature
Nuhu,M (2014). Role of Ratio Analysis in Business Decisions: A Case Study NBC
Maiduguri Plant , Journal of Educational and Social Research , Vol. 4 No.5 ,
105-118.
Arista, Desy; dan Astohar. 2012. Analisis Faktor – Faktor yang Mempengaruhi
Return Saham (Studi Kasus pada Perusahaan Manufaktur yang Go Public di
BEI Periode Tahun 2005 - 2009). Jurnal Ilmu Manajemen dan Akuntansi
Terapan, Vol.3, No.1.
http://www.revistas.unam.mx/index.php/rca/